The long-awaited boom in the real estate market has arrived, at least in terms of sales in the first half of 2024. As a result of the new home building subsidies, the more favorable interest rate environment and the easing of the economic climate, the willingness to buy a home has improved spectacularly. In the first half of 2024, according to data estimated by Duna House, 61,646 transactions took place on the market, which is a 40 percent increase compared to the same period last year. With the help of CSOK Plusz, a newly active group of buyers can result in up to 20-30 thousand more housing transactions in 2024 compared to this year, in addition to the realization of deferred demand – MBH Bank optimistically predicted in its latest sector analysis.
Continued rise in price
According to the bank’s findings, in the first quarter of 2024, housing prices rose nominally by 2.7 percent, following a 1.5 percent increase in the previous quarter. Basically, as a result of favorable base effects, the annual nominal growth rate slowed from 8.4 to 7.5 percent observed in the previous quarter, and in real terms, house prices rose by 3.6 percent on an annual basis.
The bank’s analysts expect housing prices to rise further in the rest of the year. In other words, we add, the rise in prices is unbroken, large masses may be pushed out of the housing market and forced to rent, which in turn may result in an increase in rental demand, which may further increase housing rents.
In June 2024, rents increased nationally by 1.9 percent and in Budapest by 1.6 percent compared to the previous month. Compared to the same period of the previous year, rents in June were 10.3% higher nationally, 9.9% higher in Budapest, and 108% and 99% higher than the 2015 base. In Budapest, the average monthly rent was HUF 250,000 in the first half of the year. The most expensive apartments were offered for rent in the Pest region (HUF 265,000), and the cheapest in Northern Hungary (HUF 129,000).
The positive effect will be felt mostly by small and medium-sized enterprises, which receive orders for the renovation of family houses
Photo: Knauf Insulation
Meanwhile, the stock of new apartments is expanding very slowly. Looking at the entire first half of this year, a total of 6,027 new apartments were completed in Hungary, 18 percent less than a year earlier. The number of apartments to be built based on issued building permits and simple notifications was 8,972, which was also 18 percent less than the same period in 2023. Based on the data, the analysts of MBH Bank believe that the declining dynamics that have been going on for years will continue, and based on this, even fewer apartments may be built in 2024 than last year, their number may range between 15-20 thousand.
Changed regulatory environment
On July 1, the home renovation program started, which can give a boost to the construction industry and the housing market. A maximum of 20,000 family houses are expected to be renovated, with a budget of HUF 108 billion. According to the Ministry of National Economy, 5,000 preliminary energy certificates were completed by the middle of July, and more than 6,000 interested parties consulted about them at MFB Points.
Through the home renovation program, the construction industry can get a boost, which is much needed to recover from the current negative trend. Due to the material requirements for the renovation of buildings, the capacity utilization of raw material manufacturers may improve, and the order book and labor demand of construction contractors may also start to increase.
Changes
The voluntary APR ceiling for newly available home loans (that is, the total loan fee indicator indicating all the costs of borrowing – ed.) was in place until June 30, and it is already clear that the banks will slowly but surely raise their interest rates. The rule for action areas in the rust zone has been amended at two points. One of the changes concerns the tax refund subsidy, and the other is related to the change in the ownership of rust zones.
This year, the conditions for a meaningful acceleration of lending are improving both on the demand and supply side. At the beginning of the year, the decrease in interest rates for housing loans brought a breakthrough for loans contracted under market conditions, CSOK Plusz has been running at a higher level since the second quarter of the year, and contracts for home renovation loans started in June. In 2024 as a whole, the bank expects the new contract volume to jump back to the level of 2022.
The increase in real rents favors investors, and the evolution of the yield environment through lower interest rates and the payment of government bond yields can also drive traffic, so this buyer class can reappear on the housing market. This year, due to the decrease in inflation, the rent increase is expected to be smaller than last year, so an increase of around 10 percent can be expected – the bank’s experts believe.
Our colleague Privátbankár, who also belongs to Klasszis Média, talks about the current real estate market prices How much is my property worth? column entitled reports on a weekly basis.
