Getting a new flat requires struggle – Part Two
July 12th, 2016

In this series we’re publishing’s interview made with Tibor Nagygyörgy, Biggeorge Property Ltd.’s founder and owner. Following part one, part two is about the effects the halt on tax reductions could take on the real estate market, about how conscious buyers are and about tendencies in prices to be expected.

How much do you count with tax reductions stopping by the end of 2019?

I think everyone takes this into account. Developers are also more careful, not knowing what will happen to VAT rates after 2019, to CSOK, but buyers also have the same thought processes. If the reduction of VAT actually applies for the timeframe mentioned, buyers will intend to purchase their properties before the changes. This also results in the earlier 7 years of unmet demands added to the demands of 2016-2019, and in the end, if needed, those of 2020-2021 could be added to the sum as well. Thus, it is possible that 7+4+2 years of demand will appear in a timespan of 4 years on the market.

How conscious are buyers when purchasing – do they look for trustworthy companies, or rather concentrate on prices?

Primarily, it is only recommended to purchase properties from projects carried out by trustworthy, already established and experienced developers, whether the property will be private, an investment, or both at once – or else our money will be gone for good. In my opinion, it is the buyers’ responsibility and in their interest to be thoroughly informed, and buy from developers who have the sufficient experience and appropriate references. Luckily, as much as we see, they’re paying more and more attention to quality and security regarding the completion of the project they plan to get involved in. Moreover, banks have a serious responsibility in picking the projects and developers to finance. They can also contribute to the possibility of less scandals surrounding the next period’s developments than those at the beginnings of the noughties.

The pre-owned market saw a significant rise in prices in 2015, flats have become 20% more expensive in Budapest. How big of a rise are you expecting this year?

It’s difficult to say an exact number. The aforementioned macroeconomic factors each contribute to the rise in prices, while we still haven’t reached the levels effective before the recession in real value. In addition, in comparison to the price levels of other East-Central European countries, that of Hungary is still considerably lower, we could only catch up to them with a 20% or even 50% growth. This doesn’t necessarily mean that it will certainly happen, but it’s safe to say there’s a cap for the raise because of the large gap.

The rise in the prices of pre-owned housing will somewhat be limited by the active development market and supply, but it’s an important question if this will counterbalance the previously mentioned positive macroeconomic processes. Even if the new property market flourishes, there are only 5000-6000 transactions expected to be finalised in 2016, and around 10-15 000 in 2017, which is still a very small amount compared to the 150 000 on the pre-owned market – thus it can’t generate a significant effect on the entirety of the market. I reckon that there’s still further rises to be expected on the pre-owned market, but it will not be as dynamic as it has been until now: we will probably experience a slower, more balanced increase.

However, the regional differences will remain unchanged in my opinion – an increase in prices will happen in those areas that can present solvent demands, which are mostly more developed cities, regions and central districts in Budapest.

In the upcoming last part of the series, you can read about the future tendencies on the Hungarian real estate market, the company’s current developments, the different types of their clients and you can also learn why they decided not to develop in rural areas.


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