HUNGARY: SEPTEMBER 22 CONSTRUCTION & REAL ESTATE NEWS
Hungary’s high construction activity start in Q1 2022 was followed by a slowdown in Q2 2022. The EBI Construction Activity Report has found that between this April and June construction works started at a value of around HUF 800 billion Hungarian forint. Although the value of projects entering construction decreased in Q2, these are not low numbers at all as Activity Start has been the 5th highest (on a quarterly basis) of recent years. It should be added, though, that recently construction costs have dramatically increased, massively pushing up the Activity Start indicator calculated at current prices, while at constant prices the volume would be lower.
In terms of building construction works, Activity Start rose in Q2 2022: the value of started construction works in the segment exceeded Q1 2022 and accounted for more than HUF 560 billion, the second highest level in recent years (after the period between April and June 2021). It is also true here that Activity Start calculated at current prices has significantly increased due to the hike in construction costs in recent years.
Within building construction works, Q2 2022 brought a massive drop in residential buildings. At the same time, non-residential buildings had a major expansion with Activity Start indicator going up to over HUF 500 billion between April and June 2022, the second highest after Q2 2021.
Multi-unit residential buildings (MURBs) started to be built on less than HUF 60 billion in Q2 2022, the lowest value since 2016 (excluding H2 2020). Construction costs have greatly increased since then, that is, at constant prices, this means a much smaller construction volume.
Compared to Q1, the decline in Activity Start was around 40%, but compared to Q2 2021, there was a much smaller fallback (around 18%).
On a positive note, the preferential 5% VAT applicable to new home purchases has been extended until end-2024, so developers don’t have to rush to obtain building permits until the end of this year. Another change is that the introduction of stricter energy regulations originally effective from 1 July 2022 (occupancy permits are not to be issued for dwellings with an energy rating lower than BB) has also been postponed by two years.
However, a new administrative burden has been introduced: in case of buildings larger than 5,000sqm, and in case of new MURBs with a total useful floor area of more than 1,500sqm on one building plot and consisting of at least 6 dwellings, the National Architectural Planning Council led by the chief architect will have a veto right.
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