Slightly increasing prospects in the housing market

The prospects of the housing market reached their lowest point in the second quarter of last year, and market expectations have been gradually improving since then. As the current survey shows, both the real estate companies and the citizens became more optimistic than they were a quarter ago. At first, the epidemic had a serious negative impact but the market operators have learned to deal with the difficulties involved. Besides, the new state measures will also boost the new, used and renovation housing markets. Respondents expect a symbolic fall in the price of second-hand flats in the capital in the near future, stagnant housing prices in the countryside – as it turns out from the joint survey of GKI and Masterplast.

Hungarian housing market index of GKI-Masterplast, 2013-2021

Source: GKI surveys

GKI organizes a survey in every quarter in order to assess the prospects of the companies dealing with real estates. 116 such companies answered the present survey.  The analysis summarizes the results of the representative survey organized for the civilian population (sample of 1000 people).  Since January 2020, the survey is carried out with the assistance of Masterplast Nyrt.

In the current survey, the market outlook for real estate businesses in the capital for the next 12 months has remarkably improved compared to the fourth quarter of last year. Market operators expect a decrease in oversupply and a stabilization of the market in the near future. The outlook has also improved to a greater or lesser extent in the rural areas, as the respondents foreseen a balanced or a similar market situation in several districts.

The residents’ expectations about the home purchase or construction fell sharply in the second quarter of 2020, but have been improving since then. This did not happen otherwise in the first quarter of 2021 either, as the public outlook strengthened significantly on a quarterly basis. In a survey in March 2021, 72,000 households stated that they would definitely buy or build an apartment in the next one year, while 201,000 households showed an intention to do so. In this respect, the population is therefore not very disturbed by the second and third waves of the epidemic, either.

The domestic and capital housing market index of GKI (which cumulates the expectations of real estate companies and the population into single figures) increased by 6-6 points compared to the previous quarter – however this still means a 5-point-decrease on an annual basis. The value of the national index fell into the positive range.

The majority of survey respondents expect the housing prices to stagnate over the next 12 months. In the rural districts, the proportion of those speculating on price increase is slightly higher than those expecting price reductions, while this tendency is the opposite in the capital. According to the numerical forecasts, in the next one year a “symbolic” price decrease of around 1-2% is expected in the capital, and stagnation in the countryside. In the case of newly built flats, the reimbursement of the reduced VAT rate brought a noticeable rearrangement. From this measure, the market operators expect a clear recovery and prices partially absorbing the VAT-reduction.

 Expected change in the price of used flats in the next 12 months, March 2021

(Expressed as a percentage compared to the current prices)

The results of the last survey from November 2020 are indicated in brackets.

Source: GKI surveys

The market of rental housing also seems to cool down. In the fourth quarter of 2020, those expecting a decrease in the rental prices in the capital constituted a significant majority, while now the proportion of those waiting for stagnation is the strongest. Countryside was invariably dominated by those expecting stagnation. The expected fee reduction for the year decreased significantly (from 8 to close to 0%) on a national average.