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Preferential VAT rate phaseout to hit pre-fabricated home sales

The phaseout of a preferential VAT rate on home construction is expected to reduce pre-fabricated home sales by "at least 20%" to around 1,200 this year, József Kárpáti, the head of the pre-fab division of the Hungarian National Association of Building Contractors (EVOSZ), told Világgazdaság.

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Kárpáti said the return to the normal VAT rate had added HUF 6 million-8 million to the typical HUF 30 mln-40 mln price of the most popular pre-fab homes.

Hungary temporarily reduced the VAT rate on home construction from 27% to 5% for four years until the end of 2019, promoting a building boom and supporting the renewal of the countryʼs stock of outdated dwellings.

Kárpáti noted that the share of turnkey pre-fab homes had fallen to 36% this year from 90% in 2019, as home buyers resort to the help of family and friends, or unscrupulous contractors, to finish their dwellings.