Market research company Ecostat's real estate index fell 1.5 to 46.5 in the first quarter of 2006, well under its all-time peak of 56.8 in Q1 2002, CEO Pál Belyó announced on Friday.
He added that the fall in the indicator is not related to home construction. Some industry insiders say supply is growing on the market for new homes and sales are taking longer, Belyó said. The market is becoming more fragmented, with homes built in bad locations only selling if buyers are offered a steep discount, while sellers of homes in good locations can demand a big premium, he added.
Market players expect both home and lot prices to increase 6%-7% in 2006, compared to a projected 2.3% inflation rate. Home renovations and home purchases are second on the list of big purchases Hungarian households plan to make, according to the Ecostat survey.
About 6% of households plan to buy a home in the near future. About 16% of households said they would take out loans to make big purchases, and 32% said they would take out a loan to buy a new home.