Central Bank: Hungary’s Property Market Back On Track 7 Years After Financial Crisis
Housing prices in Hungary have reached pre-crisis levels following a recovery last year, according to the Hungarian National Bank (MNB). An increase in housing prices started early in 2014 continued in 2015, the central bank report said.
Home prices climbed by 12% year on year in Q1-Q3, according to data compiled by mortgage lender FHB, and prices for resale and new homes increased by 10.4% and 8.7%, respectively, according to the Central Statistical Office’s data.
“Overall, we view the recovery on the housing market as favourable. The dynamic growth of house prices and the expansion of the volume of new housing loans are not considered to be excessive, thus the current risk level is low,” the central bank’s management said in an executive summary of the report.
Demand for homes has been lifted by higher real wages, better long-term labour market prospects, low interest rates, household deleveraging and the elimination of exchange rate risk with the conversion of retail FX loans into forints, the report shows.
However, housing market developments still need to be closely monitored, due to the frictions on the supply side, the significant increase in demand and the external factors affecting the market”, MNB managing director Barnabás Virág said, adding that housing prices had approached the long-term average in the past one and a half years but said there was still room for further growth.
“The Hungarian housing market is not overheated,” Virág told a news conference held on Monday in order to present the report. “We think we won’t see a very fast increase in housing prices in the coming years … but the trend will be upwards.”
Hungarian house prices jumped by a total 21 percent in the period from January 2014 to September 2015, compared with rises of 7.2 percent in Slovakia, 6.9 percent in the Czech Republic and 3.1 percent in Poland. In 2007 more than 35,000 new flats were built in Hungary but this had plunged to around 7,000 by 2013. The central bank expects nearly 20,000 new flats to be built in 2017.