Hungary’s homes market recovery demand-driven, says MNB
The recovery on Hungaryʼs homes market over the past year has been supported by a number of demand-side factors, while “frictions persist” on the supply side, the National Bank of Hungary said in a biannual Housing Market Report yesterday, according to Hungarian news agency MTI.
Higher household income, lower unemployment, deleveraging and low interest rates have contributed to demand, according to the report. Real household income is set to rise about 5% this year, accelerating from 3.3% in 2015, while household debt-to-income has sunk below pre-crisis levels. Lower lending rates have made home loans more appealing and meager returns on fixed income investments have prompted more Hungarians to consider putting their savings into real estate.
On the supply side, developers face tight credit conditions and a labor shortage, while projects remain highly concentrated in the capital. The large number of homes mortgaged against non-performing loans as well as unoccupied homes are a “potential factor of uncertainty”, the report says.
Almost 40,000 homes need to be built in Hungary each year to replace old homes and keep up with the increase in the number of households, according to the report. About 7,600 homes were built in Hungary last year.
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