Hungary to launch HUF 200 billion housing scheme - EcoMin
Points 7 and 13 of the Hungarian government's New Economic Policy Action Plan stated that the government aims to support affordable housing, improve housing conditions and develop a housing programme for young people.
As part of this, a new housing development capital programme will be launched, in which real estate market players will have access to up to HUF 30 billion per fund through domestic real estate funds, whether public or private. The programme is expected to inject more than HUF 100 billion into the real estate market, the Economy Ministry announced in mid-November.
Economy Minister Márton Nagy told a press conference today that the government's goal is to build at least 25,000 new homes in Hungary every year. A preliminary consultation was held with the real estate market and residential property developers, after which the affordable housing programme was born.
The Minister said that under the programme, HUF 200 billion will be made available to real estate funds for three main purposes:
- dorm construction;
- rental housing and
- new housing.
The subsidy can be used for five years, according to the ministry, this timeframe can be sufficient even for two housing developments.
Basically, in addition to the demand programmes, here is a supply programme to boost the growth of new housing,
said Márton Nagy.
Details of the programme:
- It kicks off on 1 March and applications are open until 31 December.
- The state will provide up to 70% of the funding for projects, with the remaining 30% to be provided by private investors.
- Existing and newly created property funds can apply.
- 100% of the capital invested must be used in Hungary, 80% of which must be used for residential housing development.
The minister explained that if private investors ask for 10% for such an investment, the state also expects the same return, so the return on investment should be the same as for a private investor.
Nagy also pointed out that the number of new housing starts in 2024 is expected to be only around 12,000, which is historically low. Meanwhile, the number of transactions in the housing market has increased by 40% compared to the previous year, which means that this has had a price boosting effect.
The price per square metre of HUF 1 million or less is now a (pipe)dream in Budapest, but the rental market is not looking good either: young people today spend 40-60% of their monthly income on rent, and today rent is the new overhead, which is a critical level according to the OECD.
The aim of the programme is to stimulate the housing market, increase supply and thereby tame price increases. According to the minister, the release of the HUF 200 billion envelope could provide a significant boost to new housing construction, the macroeconomic effects of which could be felt as early as autumn.
He hopes to keep the proportion of foreign students in the new dormitory developments below 30% - they are mainly built for Hungarian students. Pricing may also depend on social need and academic performance. The universities will book these dormitories, but the exact pricing will depend on them, depending on the circumstances.
Bence Gerlaki, deputy state secretary responsible for economic development strategy, outward direct investment, consumer protection and trade, added that hopefully the final condition for the housing programme will be issued in the first week of February and it will be ready to start in March.
The new programme could mobilise up to HUF 800 billion over five years, he said.
The maximum is HUF 30 billion per fund manager, which can be increased to HUF 50 billion if required. If the demand exceeded the envelop, it is not excluded that the HUF 200 billion limit could be increased, the Minister of National Economy said in response to a question from Portfolio.
Mihály Varga, top ministry, HUF
In response to a question on Mihály Varga's appointment to the central bank, Márton Nagy said that he congratulated the current Finance Minister on his appointment, perhaps as the only economist to do so publicly.
He noted that they have been working in the same government for two and a half years, and he considers Varga a very well-prepared professional, and they have a harmonious and professional relationship.
We can argue with each other in a way that is professional. That's a good thing and I look forward to working with Mihály Varga [as MNB Governor] and the central bank.
The exact structure of the top ministry could become clear in a matter of days, but Viktor Orbán will decide on that, he added.
After the merger, we need a new minister, but the staff at the Ministry of Finance is an excellent one, and hopefully they can continue to work, but the name of the minister responsible for the budget is not yet public.
Aw, he is really humble. Cute. The only name in the hat is his, and any other choice by Orbán would be a huge surprise and bad for Hungary's perception.
On the forint, nagy said that stability is the most important thing, not where and how high the exchange rate will be.
We have to reduce volatility, economic policy has to be predictable.
It would do wonders to the predictability of economic policy if the government did away with the state of danger and governing by decree, which allows the cabinet to enact laws on a whim.
Next year, the government will meet the challenge of keeping the budget deficit at 3.7% of GDP and managing the expiry of the Premium Hungarian Government Security (PMÁP) in March, Márton Nagy concluded.
Cover photo: Portfolio
