Index – Economy – This year, the fence will not be made of sausages either

What big trends did 2020 bring? How, to what extent did the pandemic disrupt the housing market?

László Balogh: In the last five years, especially between 2015 and 2018, there has been a clear recovery in the market. More and more players entered the market, while prices increased dramatically along with the number of sales and purchases. However, 2019 brought a reversal of the trend, when real estate prices, especially in Budapest and major Hungarian cities, really pushed the affordability ceiling and investment buyers moved at an extremely high rate of about 30 percent. cent on the market.

However, the introduction of the Magyar Államampapír Plusz bond a year and a half ago represented a real alternative for investors, with which a competitive, safe investment product was launched, similar to real estate, but with much less maceration. Therefore, in the summer of 2019, most investment buyers disappeared from the market, who were generally able to pay more for real estate than retail buyers. In other words, the bond issue largely prevented real estate prices from rising to the skies and a process of consolidation in the market could have started. In 2020, by comparison, we sat on a roller coaster the whole way.

I think the beginning of 2020 also started with the usual market recovery. There have been requests from girls under the tree, as well as big fights, and many families have said again, “We are sure we will not spend another Christmas in this apartment”?

Yes, like every year, January and February 2020 were strong months for property searches. In fact, families do not make far-reaching decisions about their housing more than once during the year-end lockdown period. Since most Hungarians live in their homes and houses, and 85% of the Hungarian population lives on their own property, in addition to the strong consideration to buy, our current house must be sold in advance. In most cases, this can take two to three months.

Then in March, Covid came along, breaking momentum earlier in the year. How exactly did the pandemic bring down the housing market?

During the period of curfew restrictions from mid-March to the end of May, real estate sales fell by roughly 40 to 50 percent, as expected. What certainly kept the housing market alive was that, for example, those who booked their next home in the middle of January through February to pay the full purchase price in March and April were no longer in a particular position at that. moment. At best, accepting the failure of the 10-15 percent deposit, they could decide to back out of the purchase, which, in turn, would not have been very good. Then, in May and July, the population made up for deferred sales in March-April.

As a result of the epidemic, many people moved to the countryside. Has the holiday shopping boom really started? Is this confirmed by the numbers?

Yes. Last summer, there was almost no real estate for sale in the vicinity of Lake Balaton that would not have been bought by investors or buyers for their own purposes. At the same time, a third layer appeared next to them, which is also not negligible. Those who spent so much time at the head office due to the epidemic situation that they realized that they could even give up their apartment in Budapest, because they can do their work in the same way from their permanent vacation home on the shores of Lake Balaton. They travel to the office no more than twice a week, if necessary.

The second wave broke out in October, but as the government moved towards the end of the year, it announced more and more new elements in support of housing construction. These include the home renovation subsidy and the home tax reduced to 5%. Since the fall, has the market concentrated dramatically for 2021?

There was great anticipation at the beginning of the year and new forms of family support since then, remember, they are all subject to certain conditions, most of the time fathering children, and not forever, in exchange for futures. Let no one expect housing prices to rise 10-20% again in 2021, because sellers will pocket the subsidies that will be delivered to buyers. Especially since in 2019, families signed about 30,000 chocolate contracts, which meant about 150,000 transactions. Based on this, it affected every fourth and fifth real estate purchase.

That rate is sure to improve in 2021, but the discounts could land in the wallets of families buying for their own purposes, who may pay less for a property than investors or foreigners. Thanks to targeted state subsidies, there will be a recovery in turnover and more sales, but the trend is not expected to change, the aforementioned consolidation of the housing market, the slow decline in house prices that are approaching the real .

The phome renovation program Can it result in us being less afraid of buying less pretty houses?

It is true that housing rehabilitation support, which can be requested for up to three million guilders and is widely available, will significantly expand the economic possibilities of families. Especially after this type of home renovation program, there was no example of such a large volume in Hungary before. Likewise, there was a similar program of panels that spanned periods, practically with less or greater intensity since the change of regime, thanks to which a few thousand panel floors were renewed each year, mainly in the country. That is why it already seems that the home renovation program has stirred the imagination of many, and is expected to do so for the duration of the program until the end of 2022. Yes, this may have the effect of making people less afraid of the properties to renovate or of average conditions.

Based on what has been said so far, we do not expect a miracle here, and we are managing on the spot how much more valuable the properties to renovate this year and next will be.

Really, nobody expects that the homes to be renovated now will be worth more than the new construction and renovation because most buyers are basically looking for a new or renovated property. While 60 percent of the national housing stock is in medium or lower quality conditions. But with the new grant, these properties can get not only new, but more opportunities to become our dream home.

Support for home renovation is also expected to help the new real estate market, as the turnkey condition of most new-build properties generally means they don’t have kitchen cabinets yet and the cables hang from the wall. . However, such support can also greatly help buyers in the new home market for permanent relocation. Meanwhile, there will obviously be many families whose home renovation program will make their existing home more livable.

What can we expect? new real estate market reduced to 5%, which does not have to be paid by check.

This will also give a big boost to the new housing market, similar to 2016-2020 in the first act. During that period, the number of homes built in one year tripled. Because the housing tax was lowered to 5 percent this year, it may again be helpful for entrepreneurs to build homes. However, no one yet sees if the reorganization caused by the coronavirus will alter the balance between supply and demand of professionals and contractors. Many professionals have returned home from abroad and several non-housing projects have been postponed due to the epidemic, further increasing the performance of contractors. At the same time, the wave of home renovations starting this year will tie up building capabilities, and home construction is also expected to pick up by the end of 2026.

Can you already see some of the trend of the real estate market in 2021? What shape will the curve have?

In 2021, buyers for their own use will have a high probability that their situation can improve a lot, which also means that sellers will also not have a sausage fence this year. After the previous trend reversal, there is a high probability that the slow consolidation will continue in 2021, the moderate recovery in the housing market and the movement of prices towards a more affordable range will have a notable effect this year. But it is better if no one expects a price reduction of ten to twenty percent in a year. In any case, the rise in prices is much faster in the housing market than the reorganization of prices.