Housing market develops faster in towns, villages outside capital

Sustainability

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In 2017, 14,389 new dwellings were built in Hungary, 44% more than a year earlier. The number of dwellings built did not increase in Budapest, but grew by more than one and a half times in towns and villages, the Central Statistical Office (KSH) reported on Friday.

The number of home building permits issued in Hungary in 2017 rose by 20.4% year-on-year to 37,997, data released by the KSH show.

The number of home building permits issued in Budapest rose 56.3% to 14,632. In small towns and villages, the number climbed 26.6% to 5,487. In county seats and cities with over 50,000 residents, the number of building permits fell 9.0% from a high base, to 8,151.

While about half of homes are built by property developers and half by private individuals, just as a year earlier, the KSH noted that the fact that the number of completed homes in Budapest stopped growing was due to a 8.6% drop in the number of homes built for sale and rent.

The average size of new homes was 100 square meters, up by six square meters from a year earlier.

State news wire MTI recalls that in late 2015, Hungarian lawmakers lowered the VAT rate on home construction from 27% to 5% and eased rules for obtaining building permits. Around the same time, the government launched a home purchase subsidy program for families with children, known by the acronym CSOK.

Commenting on the fresh statistics, Tibor Földi, CEO of Cordia, a unit of property developer Futureal, told MTI that the number of new building permits issued could start falling already from the end of 2018 unless the government extends or makes permanent the preferential 5% VAT rate on home construction. At present, the preferential rate is set to expire at the end of 2019.

Nándor Mester, senior analyst of property listings group Otthontérkép, said 5,000-7,000 or at least 30% fewer new homes could be built than earlier planned if the government fails to take a firm decision on extending the preferential VAT rate.

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