14% of Hungarians with retirement savings could break nest egg, HUF 300 billion could go to the housing market

More than three quarters (76.5%) of respondents to the Bankmonitor survey said they had some type of state-subsidised pension savings (voluntary pension fund, pension insurance or Pension Savings Account (PSA or NYESZ)).

Most respondents were in a voluntary pension savings fund, with 60% of indicating they have such savings. The second most popular was pension insurance (24%), while the least popular form of savings was the PSA, with 15%.

Almost half of the respondents have a housing goal

In the survey, Bankmonitor also asked whether respondents had any housing goals within the next 12 months. This is key because the Economy Ministry's idea is that only in the case of use for housing purposes would it be possible to unlock savings for pension purposes tax-free.

There were negligible differences between respondents with and without savings in terms of housing goals. In the total sample, 54% said they had no housing goals in the next 12 months.

19% of respondents said that they would buy or build a home within one year, a further 26% plan to renovate or modernise their home, while 1% plan to enlarge their existing property.

14% of savers would tap into their savings

Those who have retirement savings were also asked whether they would tap their savings if a relaxation in the law allowed tax-free use for housing. In response, 108 out of 765 (14%) said they would indeed use some of their savings, 550 (72%) would not take up the option and the remaining 107 (14%) could not yet say.

According to the survey, 72% of people with retirement savings would consider it a negative measure overall to allow tax-free tapping of pension savings for housing.

However, 14% think that this would be a positive measure overall. Those without savings were somewhat more supportive: 57% of them would see this as a negative measure, while 23% said such a relaxation would make a positive difference.

How much wealth can be shifted to the real estate market?

Of the 603 pension fund members surveyed by Bankmonitor, 86 said they would tap into their savings, and 70 of them reported a housing goal within a year.

These results suggest that 12% of pension fund members would access their savings in the near future if tax-free use for housing were allowed.

Based on this, HUF 252 billion of existing voluntary pension fund assets and HUF 39 billion of private pension fund assets, i.e.

a total of up to HUF 291 billion, could be diverted to the real estate market if both sectors are affected by the upcoming change.

How big an oomph would this measure give to the real estate market?

Bankmonitor has also estimated how many real estate sales transactions could be driven by the shifting wealth pool. In the main metropolitan areas (Budapest, Debrecen, Székesfehérvár, Győr, Szeged, Pécs, Miskolc), the average price of residential property in 2023, weighted by the number of inhabitants, is HUF 37.3 million.

As a minimum of 20% equity is required to buy a property, buyers need an average of at least HUF 7.5 million in personal savings to enter the housing market.

The average voluntary pension savings (HUF 2 million) are significantly smaller than this. Therefore, only members with well above average savings would be able to pay the excess out of their voluntary pension fund account balance, while the others would need other own reserves.

Members of private pension funds are better off, where even slightly above-average savings would be enough to cough up own funds of HUF 7.5 million.

According to the survey, 8% of those with retirement savings are planning to buy or build a home within a year and would tap their savings to do so. This would represent almost 90,000 people out of the total membership of voluntary and private pension funds.

Bankmonitor conservatively estimates that 7,000 to 10,000 additional sales transactions could take place in one year if pension savings were made freely available for housing. This could create a noticeable additional demand on top of the typical 11,000 to 12,000 transactions per month.

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