Construction bounceback foreseen by a major sector manufacturer

Despite the decline in the number of new homes being built, the moderation of interest rates, the normalisation of building material prices and the direct and indirect effects of the new Home Renovation Programme, Mapei Kft.

According to the Hungarian Central Statistical Office (KSH), in the first quarter of 2024, 23 per cent fewer dwellings were built than a year earlier, while the number of building permits was 9.3 per cent lower than in the same period of 2023.

"The decline in the number of dwellings built may seem alarming at first, but the trend in the number of building permits indicates that the pace of the slowdown is slowing down," said Béla Markovich, managing director of Mapei Kft..

The expert pointed out that despite the decline in the number of housing permits, he expects the market to gradually stabilise. Some housing companies have already started to invest, thanks to the moderate interest rates. In his opinion, this situation will lead to a recovery in residential demand and investment purchases.

The Home Renovation Programme is moving the market in the right direction

In addition, the new Home Renovation Programme is expected to stimulate the renovation market, as energy modernisation subsidies will generate additional renovation work. For example, a heating upgrade is often followed by bathroom and kitchen renovation or other major investments.

"In the field of housing renovation, in the case of a seven million HUF project, the owner only has to pay one million HUF out of his/her own pocket, the rest can be covered by the Home Renovation Programme. This leaves property owners with considerable room for manoeuvre to carry out additional renovation work, such as bathroom remodelling, patio construction or even a simple paint job. This will certainly contribute to a further recovery of the market."

- believes Béla Markovich.

Normalisation of construction material prices

Both construction and renovation are benefiting from the fact that construction material prices have now normalised and, although they are not expected to fall, they are not expected to rise significantly in the coming period. All these developments will mitigate the effects of the decline in housing construction, putting a brake on the slowdown in the construction sector.

According to Béla Markovich, a bounce back can be expected, if not this year, then next year, due to the further decline in interest rates and the resumption of public investment following the inflow of funds from the European Union.