Overvaluation Eases on Hungary Home Market as Demand Falls
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Overvaluation on Hungary's home market is easing as demand falls, the National Bank of Hungary (MNB) said in a biannual report on Monday.
The Home Market Report pointed to a "turnaround" on the market in the second half of the year as home sales and home loan volume fell significantly, the central bank and financial market regulator said.
MNB department head Sándor Winkler pointed to a 43% year-on-year decline in home sales in the first quarter, presenting the report. He added that home prices had fallen 3.6% quarter-on-quarter in Q4.
Winkler said that a similar trend could be seen in a number of other European Union countries, adding that home prices had fallen in 15 member states at year-end.
MNB estimated that home price overvaluation fell to 9% for the country as a whole and to 3% for Budapest alone.
Winkler noted that the share of homes purchased by foreign nationals was on the rise.
Home loan outlays plunged 69% year-on-year in March, slipping 56% for resale homes and falling 87% for new homes.
The share of home purchases involving credit fell to 34%, while the average home loan size fell.
On the supply side, low demand and a labour shortage continue to challenge the home construction industry, while building material shortages eased.
Costs of building a new home were up 21.6% in the fourth quarter as materials costs increased 25.2% and labor costs rose 16.2%.
The number of home building permits issued in Q1 dropped 37.6% and demand is not expected to pick up for the full year, Winkler said. He added that the construction industry association Évosz expects the number of home handovers to fall 12% to 18,000 in 2023.
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