MNB points to 'historically high' home price overvaluation
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The National Bank of Hungary (MNB) said home price overvaluation has risen to "a historically high level of 18%" in a biannual report on the residential real estate market published on Wednesday, according to a report by state news wire MTI.
"According to our estimates, home prices were 18% over the level justified by macroeconomic fundamentals country-wide in the fourth quarter," MNB said in the report.
It put overvaluation in the capital at "a still high" 15%.
The report shows that 168,000 homes changed hands in Hungary last year, 16% more than in 2020, but still under the number in 2019, before the pandemic.
The number of new homes handed over dropped 30pc to around 20,000 in 2021, and the number continued to fall in the first quarter of 2022. The annual renewal rate for Hungary's housing stock stands at 0.4%, which MNB pointed out is low in European comparison.
MNB said supply-side "friction" amid increases in home construction costs that outpaced those in all other EU member states last year are expected to worsen further in 2022 as raw material and energy prices continue to rise and supply chain interruptions weigh against the backdrop of the war.
In spite of a tightening cycle, the report noted that home loan rates increased "moderately" in the period to the end of March, but said a further increase in the cost of borrowing could cause chances to buy a home with credit to "deteriorate significantly". It added that lenders augur falling demand for home loans already in the second and third quarters of this year.
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