The Virus has not Spared the Housing Market, Either

The expectations of housing companies clearly deteriorated in April 2020 compared to a quarter earlier – according to the survey of the Hungarian economic research institute GKI and Masterplast. The epidemic caused by the corona virus has crashed the already slowing housing market, so the outlooks have become much more modest.

The value of Budapest and Hungarian housing market index of GKI fell sharply on a quarterly and annual basis. According to the respondents, an average price drop of around 9-10% is expected in Budapest and 7-13% in the countryside for the next 12 months.

The investment climate has transformed in recent months. Due to accelerating inflation, the yield on super government securities called MÁP + is no longer so attractive. The stock market crash in March, followed by volatility since then, has shaken many investors. In such cases, real estate is usually valued as an investment. On the other hand, unemployment is rising markedly and wage dynamics are declining in many places, even in nominal terms. Therefore, caution and provisioning may be the typical strategy among the households, the report says.

In the present survey, real estate businesses’ expectations for the next 12 months have deteriorated markedly from the previous quarter. The Buda side and the center of Pest are still standing (there was only a relatively slight decline here), but a significant deterioration could be registered in the outer districts of Pest. In Western Hungary - with the exception of family houses - the outlook deteriorated slightly for all apartment types, and in Eastern Hungary for all examined segments. From all this, a substantial decrease in the housing market turnover can be projected.