Could it be true? The CSO measured a brutal drop in house prices!

The good thing about the current crisis, or crisis, which we like best, is that we have fallen into it with a lot of past experience, even if it is completely different in nature from the financial crisis in the real estate market of 2008 (mortgage market). Obviously, there is an unprecedented tourism crisis, but for the moment, what we are seeing in the housing market could only be called a crisis (both in terms of transactions and prices). The real question in light of the OSC’s preliminary data on the latest house prices is that the chart shows real and early signs of a house price break, or is it simply a deeper fluctuation, well definite and explainable, caused by a brief panic over the pandemic.

The fact that house prices are not rising to the sky at the same rate as in the last 5-6 years, and that we reach a temporary equilibrium point, was even a fact for some time (this was evident by the fall prices of almost 1% in the last quarter of last year). ), however, that it may actually be necessary to deal with such a quarterly price reduction seems fundamentally surprising at first (although there are certainly some who would not be surprised to see a larger price drop).

Although the spectacular rise in general house prices (second-hand and new) for almost 1 year has not really been an option in either Budapest or the country (the last time there was a price increase of more than 3 % quarterly in the second quarter of 2019), most of our opinions and analysis explained (predicted) that although this growth had stopped, we had reached a peak, but we did not have to prepare for a spectacular drop, which we tried to justify with abundant correlations and well mapped (construction costs, income, government incentives, energy requirements, inflation). We by no means thought that stagnation would mean that we could draw a straight line from the top, so obviously some movement could be imagined each quarter (+/- 1-2%), but we really don’t think that such a price drop spectacular.Then it could be measured in a single quarter (if this is still the final data), but the first round of understandable panic caused by the virus could have done it too.

To what extent the final data will eventually show a price drop will only be revealed at the end of the month. What we know and suspect is that the data for the smallest settlements always comes first, that is, the cheapest category of housing makes up the largest half of the database today, this can also be seen well in the columns composition effects. However, what we are examining, and from which the charts are also drawn, is a series of numbers showing the pure price change, showing a realistic picture of the price change actually experienced.

Even if house prices were producing a spectacular drop in the second quarter of 2020, either by 8 percent or even “just” by 4-5 percent, will the third quarter (which has substantially ended? , since it represents the July-August-September data)? or more fall?

Exciting findings (based on preliminary data)

• Prices fell between the end of 2018 and the beginning of 2019.
• Prices are now 60% above the 2015 average price level across the country. Based on this, it is not surprising that some (possibly the center where this growth was even higher, especially since the end of 2013) realized the rise in prices more quickly and looked for a place that they considered safer and more profitable for their money, permanently or temporarily, to return to the end of the alleged price drop. .
• Since 2015, house prices have not fallen on a 1-year horizon (same period last year). Now, according to preliminary data, it is higher than 6%.
• If the 8% drop in prices is true, and the trend is likely to continue (it would be very surprising), it could mean a 20-30% drop in house prices on an annual basis, on the order of magnitude of the total fall at the beginning of 2008 and at the end of 2013. between the previous crisis.

Let’s look at the charts!

It is important to emphasize that these are still preliminary data (in fact, any quarter can be updated until 2019) and can change significantly, but it is a fact that they are visible and available on the OSC website.