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Budapest Property Market Index plummets to -21

The Budapest Property Market Index, a measure of supply and demand on the market as well as market players' plans and expectations, plunged eleven points to -21 from the middle of 2008 to January as loans become scarcer and more expensive, and demand fell, market research company GKI, which prepares the index together with AL Holding, said.

The index, which measures on a scale of +/-100, was lower just once before: in January 2003 when it dropped to -22.6 points.

Over the next twelve months, new home prices are expected to rise 2.5% in Budapest and 2.0%in Pest County. In the rest of the country, prices are expected to remain flat, GKI head László Akar said. In October, new home prices in Hungary were seen rising 3.0%-6.5%.

The Budapest Property Market Index's home sub-index dropped to -44 points, close to its historical low of -55 points in 2005.

AL Holding chairman Attila Hunyady said that, for the first time, foreign investors who had made down payments on new homes in the capital were selling them after they were completed as they could not pay their home loan installments.

The number of new homes built has plunged, Hunyady said. Just 3,800 homes were built as part of 60 projects last year, compared to more than 8,000 homes built in 98 projects in 2007. In Q4 2008 construction started on just 398 homes.

Developers were offering 8,500 new homes at the end of 2008, 800 fewer than a year earlier. The number of completed but unsold new homes rose from 1,500 to 2,300 as demand fell. (MTI – Econews)