Cheaper loans might come with fewer options in Budapest

Even a small difference in interest rates can weigh heavily on a homebuyer’s decision. Yet newly built homes are generally more expensive than comparable existing properties, while Budapest’s price ceiling could further narrow the field.

In an article published on Tuesday, 10 November, Index outlined an analysis that OTP Ingatlanpont had sent to Hungary’s MTI news agency. The real-estate agency network, a member of OTP Group, believes the announced government measures could reshape the Hungarian housing market once again.

The balance may shift towards new homes

According to the analysis cited by Index, the government has announced the end of the Otthon Start Programme and the launch of Wekerle Plus, a new financing scheme aimed at a narrower group of eligible buyers. Under the new arrangement, the preferential interest rate would be 3 per cent for newly built homes and 5 per cent for existing properties.

Valkó Dávid, chief analyst at OTP Ingatlanpont, said the difference could increase the share of new homes in property transactions and stimulate construction. The interest-rate advantage may not cover the full price gap, however, as newly built homes generally remain more expensive than existing properties with similar features.

Budapest’s price ceiling could restrict supply

For buyers in the capital, the ceiling of HUF 1.5 million per square metre may become the main constraint. OTP Ingatlanpont said the limit, which is due to remain in place until 2028, sharply reduces the number of new Budapest homes that qualify.

This may also affect District VII residents looking to buy a newly built home elsewhere in Budapest, although the analysis provides no district-level figures. OTP Ingatlanpont expects the limited choice in the capital to steer some prospective buyers towards markets outside Budapest.

Greater certainty for developers

OTP Ingatlanpont said the indefinite extension of the 5 per cent VAT rate on newly built homes could give developers greater confidence by removing a source of uncertainty.

The planned state programme for rental housing and student accommodation could also create a new market for developers. Valkó Dávid said suitable incentives would still need to be worked out before residential builders could find it worthwhile to enter that segment.

Source: Index