Index – Economy – Housing prices will continue to rise

Index – Economy – Housing prices will continue to rise
Index – Economy – Housing prices will continue to rise

The year 2021 started strongly in the Hungarian housing market: in the first half of the year – compared to the same period in 2020 – the number of sales increased by 9-10 percent, which is due to the low base due to the closures caused by the coronavirus epidemic. Among them, the housing renovation support, which appears as a new element, and the entry of transactions withheld due to the discounts announced in 2020 can be traced back to the market, László Balogh, the leading economic expert of, started describing the housing market in 2021.

The momentum was broken by the usual summer stagnation, which was confirmed by the fact that the MNB started a cycle of interest rate hikes, and the rising base rate also made the installments of newly taken loans more expensive, slowing down the real estate market.

The green loan brought a turning point

One of the turning points in the real estate market in 2021 occurred in October, when the MNB’s “green home” program was launched, which really triggered the demand for new homes.

The preferential financing program can also be considered formative in the sense that the possibility of using it no longer depends on demographic aspects (ie the number of existing and adopted children), but only and exclusively the green nature of the new residential property. The popularity of the program is also enhanced by the fact that only home loans can be obtained on a market basis with at least twice the interest burden.

What will the next year bring?

In 2022, there will be conflicting effects in the real estate market, with a common source: high inflation. Fears about the devaluation of money could entice more and more buyers into the real estate market, where an increase in demand could also lead to further price increases in the second-hand housing market. This is important because the price of new flats can almost certainly increase by at least 10-15 percent in 2022, László Balogh predicts.

At the same time, rising bank interest rates and rising installments due to inflation will make borrowing available to fewer people than before, or a smaller amount of credit will be available to the same people.

And this will weaken the demand side, except in the new housing market, where the “green home” program could provide stable demand in 2022. In his experience, many fear that the first HUF 200 billion budget will run out by March-April, but he is almost certain that additional funds will be available for this purpose due to the MNB’s recent green mandate.

Pay attention to expiration dates

Buyers should also pay attention to the fact that a number of discounts will end in terms of financing: the village shock (family home discount), the home renovation grant and the baby waiting loan will run out in 2022.

It is possible that there will be a continuation of these, but there will be many who do not trust chance and enter the housing market rather than have an unpleasant surprise in 2023.

The renaissance of detached houses and enclosed gardens

Experts at Duna House (DH) highlight the transformation of the demand side of the 2021 housing market. Garden-related properties have come to the fore, including closed gardens, whose demand has jumped significantly due to low commodities. In 2021, the value of holiday homes continued to grow, and seasonality was replaced by year-round, constant demand, which is still much higher than supply, so real estate prices on Lake Balaton are also getting closer to those in the capital.

The wave of emigration is almost without exception typical of other large cities in the country, a significant part of the approximately 140,000 realized sales were made by emigrants to the agglomeration, said Károly Benedikt, DH’s head of PR and analysis.

The average price per square meter of prefabricated flats increased by 4-13 percent in Budapest and by 3-12 percent in the countryside. Compared to 2020, the average price per square meter of brick dwellings in Budapest was 9-17 per cent, and that of rural ones 18-28 per cent.

The average price per square meter of newly built homes in the capital exceeded HUF 1 million in Budapest by the end of 2021, which may increase further, especially if their rehabilitation begins after the designation of the rusted areas.

The price will stay with us

DH experts expect an active market in 2022 as well, with 5-10 percent price increases depending on location and apartment type.

They believe that it is not worth waiting for the purchase of a home, as the rise in interest rates and the economic situation may make it more difficult to acquire real estate. The role of investment is also expected to strengthen, as real assets will appreciate in a rising inflation environment. The possible changes due to the parliamentary elections in the spring of 2022, as well as further waves of the epidemic, represent uncertainty.

We got away, we live and want to buy an apartment

The strong fright after the outbreak of the coronavirus was replaced by a “we survived, we live and want to buy an apartment” attitude, which led to a strong setback that lasted until the end of the year, summed up Petz Raymund, CEO of GKI.

In his view, inflation is now the most exciting factor affecting the housing market, and it is questionable whether investors will still turn to the real estate market during a period of horrific real interest rates. Petz expects this scenario, and that more people will enter than consider this period as an exit point. That is, investors continue to support the demand side, at least in big cities.

There is no reason to turn a trend

He expects that the trend of moving to a family house will continue, and it can already be seen that more and more agglomeration settlements will make up the full board.

In all likelihood, there will be no reversal of the trend in the housing market in 2022, with large regional differences, but the price increase of 5, even 10 percent will remain with us, Petz Raymund concluded.

(Cover image: Péter Papajcsik / Index)

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