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Tibor Nagygyörgy – Property of Biggeorge
Although the details of the program outlined yesterday are not known and the designated areas for the rust zone The 5 percent VAT is not yet final, if the rust zones are defined broadly, the 5 percent VAT can be returned to each newly built home below 150 square meters, and this is complemented by the program, creates a favorable situation in both supply and demand. It would also be a great need to see start-up rates for new projects converge to zero as a result of the 27 percent VAT, he said. Tibor Nagygyörgy, owner of Biggeorge Property.
In addition to these two factors, there may be government measures that can help energize the new housing market, mainly through building capacity development and tighter competitive control of building material prices, and rethink the framework legal and institutional framework for rental housing, but together. it can already significantly increase the production of the sector.
With an interest rate of 0 percent, they are already more likely to start rental housing projects and the program can also attract the interest of private investors.
This will have a positive impact on rents, causing a reduction in housing costs and an improvement in housing conditions. Promoting ‘green’ housing is important not only in terms of sustainability, but also in terms of reducing overall costs and therefore housing costs.
Experts will speak about the problems of the national housing market at the Property Investment Forum 2020 conference on November 19. Click for more details.
It cannot be ruled out that the central bank wants to import an additional source (derived from reimbursement insurance) that could complement traditional mortgages, thus reducing the expected level of equity, but this is not yet clear from the proposal. Including 5% VAT as a result of the proposal:
- the scope of supply and development can increase significantly
- Demand could grow significantly because many will be able to fantasize about the opportunities offered by a 0 percent interest rate for both investing and buying a home.
- As a result of the VAT reduction, prices may temporarily stagnate or prices may fall slightly, but due to fluctuating inflation, rising construction and energy costs, a significant price increase may begin in the next 2-3 years, which will be supported by current investment demand.
- Construction costs may initially stagnate after a decline and then start to rise again
1052 Budapest, Szervita tér 6
In addition, the increase in the retail loan portfolio and the growing volumes of development also play an important role in the relaunch of the economy.
Dezső Csizy – Siskin Group of companies
In recent years, the willingness of developers to launch projects has decreased significantly and the consequence of uncertainty could soon be an insufficient supply. Due to the expected 5 percent VAT in brownfields, some customers are waiting for the effects of the new option. Deferred demand due to the pandemic may soon appear in the market almost at the same time as the previous ones, which may lead to a temporary and small drop in prices.
Simultaneous support for supply and demand can balance the sector and therefore the economy.
Expanding lengthy permitting procedures may also require expansion of national priority projects, he stressed. Dezső Csizy, owner of the Siskin Group.
1117 Budapest, Budafoki út 215.
| 260 flat 28 – 91 metertwo floor surface 32.7 – 92 M Ft |
Delivery: 2021 Q3 |
| I need an offer | |
Dávid Valkó – OTP Real Estate Point
At first reading, the “New Home Program” items would be welcome from the point of view of both home builders and potential buyers, however without knowing the detailed rules and timeline, it is too early to ponder. the expected effects / trends. It is true, and we have seen several clear examples of this in the last five years in the new housing market, which
Government action can rebalance / transform the market in a short time and dramatically amplify the cycles that start on their own.
Therefore, in the first round, it is convenient to examine the current situation, recording the current image of the market as a starting point: it drew attention to Dávid Valkó, Senior Analyst at OTP Ingatlanpont.
According to our survey in Budapest in July this year, in the first half of 2020, only 1,800 new condominium apartments were sold, and roughly the same number of new apartments were sold in the capital in six months. The stock of unsold but already delivered homes increased to 850 pieces. The top three volume indicators are a significant deterioration from the boom of previous years and cite roughly the years 2014 when the housing market was just beginning. So about six years later, he pushed back the new housing market a
- MÁP + as an investment competitor,
- As a general rule, VAT on new homes will rise to 27% from this year,
- the coronavirus,
- and waiting for the “Urban Housing Creation Program” announced in April, which is still being elaborated in detail (the main element is the announced 5% VAT in rusted areas)
The postponement of the purchase of buyers due to the latter is evident, there are so many promotions of 100 departments where practically no sales have been made for this reason since April. And until the details of the expected drop are known, investors will not be able to plan with prices at this time.
The oxidation zone VAT is, on the one hand, the last factor of uncertainty in the equation causing a sharp slowdown, but at the same time the first and most important first step to substantially boost the supply of the new real estate market. In the potentially affected areas of the rust zone, projects with hundreds of floors, some of which already have building permits, can start quickly, of course with market self-regulation, so that the reduced VAT rates introduced here , and therefore supply and demand, its effect will also be known relatively soon. Until then, there will be enough time to elaborate the “New Homes Program” in detail.
Dune House
Even in the absence of knowledge of specific regulations, it can be said that any measure that increases demand can have a good effect on the domestic market for new construction housing.
The national housing stock and labor market need continuous construction and investment in housing, where modernity and energy efficiency are particularly important.
However, the implementation of the central bank idea still requires close consultation with market participants to maximize the desired impact among investors and the general public.
Cordia
On behalf of Cordia, we welcome the next ideas from the MNB real estate market: we consider both the reduction of VAT and the possibility of a loan to clients with 0% interest to be a good direction. We see that the ideas put forward by the central bank governor, György Matolcsy, would significantly improve the chances for Hungarian families and young people to obtain a home and, on the other hand, would encourage the increase in the proportion of energy efficient residential properties and the replacement quality of the floors. According to Cordia, the described program can significantly expand the range of those who can afford to buy an independent apartment, which is now a guarantee not only at home but also at work and family safety.
1117 Budapest, Buda-part tér
Now there is a great need for the economy, the housing market, the construction industry and the housing stock to reintroduce the VAT rate of 5% and increase mortgage loans.
If the 27% VAT rate for new housing development is maintained, it will not be worth it for developers to start projects, there will be no significant supply, only in the highest price category. It is important that if the 5% VAT were reintroduced there would be no time limit for its application, or if this were not feasible, it would be advisable to think about a maintenance period much longer than 4 years.
We would also consider a good direction for buyers to be able to conclude a loan agreement as soon as they sign a pre-purchase agreement for a new home, thus securing financing. This is necessary because many buyers enter into a pre-contract, but it can often be more than a year between paying for a home use permit and thus paying 100 percent of the purchase price and obtaining of a loan.
If, on the contrary, the measures proposed by the MNB are not implemented, the construction of new houses will be reduced to a minimum and construction orders will continue to fall, which will translate into an increase in unemployment. Furthermore, in the absence of adequate measures, the Hungarian housing stock will continue to age and the limited supply will further increase the price of houses.
Cover Image Source: Getty Images
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