Hungary claims Home Start will create more state revenue than expenditure

Highlights of the interview with Miklós Panyi:

It is young people looking for their first home who have been hit hardest by the recent economic downturn. This is why the subsidy will not be tied to marital status for the first time since 2010, but rather to first-time home ownership.

It would be wrong to call Family Housing Support Programme (FHS or CSOK) and similar schemes failures. Since 2016, 265,000 families have taken advantage of them and 270,000 have taken advantage of the subsidised prenatal loan. During the pandemic, 370,000 households participated in the home renovation programme. Without these subsidies and other family policy measures, 160,000–180,000 children would not have been born.

These are civil law contracts concluded with the bank, which cannot be retroactively amended by the legislator, so the 3% interest rate is guaranteed until the end of the term. This rate remains valid for the entire term of the contract, which can last up to 25 years.

Currently, around 20,000 to 25,000 first-time buyers enter the property market each year. Over five years, around 50,000 first homes could be purchased under the programme, a significant proportion of which will be newly built. This suggests that there could be an additional 20,000–30,000 first-time buyers per year compared to the current figure.

According to government calculations, the programme could lead to the construction of at least 50,000 new homes over five years, with an investment value of around HUF 4,500 billion. A significant portion of this investment will also appear in tax revenues. A 10,000-home increase could mean a 1% increase in GDP growth.

The surplus revenue from taxes and the resulting economic effects will more than cover the costs of the Otthon Start Programme, which could amount to 50–80 billion HUF by 2026.

Real estate prices rise every year and are likely to continue doing so next year. This raises the question of whether the programme will cause prices to rise even further. In his opinion, the price cap will affect the market for second-hand homes in Budapest and also send a clear signal to the new-build market.

The price cap encourages property developers to build on plots where this price is achievable under the given conditions.

In his opinion, Viktor Zsiday's criticism that the programme would be disastrous for young people is more politically motivated than based on its actual functioning and benefits.

According to a decree issued last week, developments comprising at least 250 apartments, 70% of which qualify for a 3% fixed-rate loan, can be granted priority status. This allows deviations from certain building regulations, such as those relating to buildability or building height. More apartments can be built on a given plot, including taller buildings, so more properties can be included in the programme. However, it is considered unlikely that buildings measuring 90–100 metres in height would be approved.

Cover photo: MTI Photo/Zoltán Máthé