Effects and Learnings of Housing Support in Hungary, 2015-2017

Construction industry in Hungary was heavily affected by the economic crisis starting in 2008. Although there was a slight increase due to infrastructural investments as of 2012, residential construction reached a critical level in 2013. In 2015 a new housing support policy was introduced in Hungary. Main target of the regulation is to help families to implement their new home. On the other hand, government wanted to create demand on the residential market to revitalize the industry. Since then every year changes happened to the enactment which were supposed to facilitate admittance of families to the financial sources. After three years of experience it is important to evaluate the effects of this regulation and to give a short-term prognosis based on learnings. Purpose of our research was to collect and evaluate data to enable a many-sided analysis of residential construction industry in the recent past. Areas of our analysis were as follows: trend in number of construction and occupation permissions; size, location, price/sqm and technical content of residential projects starting after 2015; change in the number and sum of support applications; ratio of credit in support applications. According to our results there are areas where fine-tuning of regulation is necessary. Firstly, location and price of several projects shows that not always indigent families make use of state support. Secondly: growing number of residential projects is partly caused by postponed and advanced constructions. Therefore, capacities of the industry cannot be used balanced. Thirdly: current projects are planned to be finished by 2020 because reduced VAT for the industry is valid only until then. Further support of residential market is questionable and may effect problems in continuous and sustainable development. Fourthly: lack of minimum energetic efficiency in regulation effects a lot of new-built flats which will be inefficient by 2021.