Output of Hungary’s construction sector fell by an annual 7.8% in October, the Central Statistical Office (KSH) has said. The drop followed an 8.1% growth in the preceding month. Output of the buildings segment rose by 18.4% in October but output of the civil engineering segment slumped by 23.5%.
In absolute terms, construction sector output came to 194.83 billion forints (EUR 617.2m). In a seasonally and workday-adjusted month-on-month comparison, construction sector output declined by 7.6%. Order stock of construction sector companies was down by 47.5% at the end of October compared to twelve months earlier. New orders signed during the month rose by 4.1% as new orders in the buildings segment jumped by 83.4% but new orders in the civil engineering segment were down by 37.1%. The increase in new building construction contracts is due to orders for sports facilities and industrial buildings, KSH said. In January-October, construction output rose by 3.1% compared to the same period a year earlier.
Commenting on the data, László Koji, head of industry association ÉVOSZ, said the drastic fall in order stock has foreshadowed the drop in construction sector output. On their part they would be satisfied if sectoral output in 2015 could stay on the same level as last year. ING senior analyst András Balatoni said sectoral output could significantly fall in the next three quarters due to lower output in the civil engineering segment. This can be attributed to fewer big infrastructural projects completed with funding from the European Union. Balatoni added that the first effects of lower VAT rates for home constructions could start showing in the second half of 2016 at the earliest.
On Monday, the Hungarian Parliament approved a bill to reduce value added tax (VAT) on new-build homes from 27% to 5% between 2016 and 2019. According to the Hungarian government’s expectations, some 5,000 new homes could be built from January on, involving an investment of 100-120 billion forints (EUR 315m-379m) and creating between 5,000-7,000 new jobs.
via ksh.hu and hungarymatters.hu