How the ÉVOSZ would reverse the trend of declining housing construction

Compared to the 13,245 new homes completed in 2024, the Építési Vállalkozók Országos Szakszövetsége (ÉVOSZ) expects around 12,000 new homes to be built in 2025, as evidenced by the declining number of building permits and simple notifications issued, according to a statement sent to our newspaper by the body acting as the industry chamber. In response to the problems caused by this, ÉVOSZ proposes several measures and solution plans to the government, adding that these measures will not appear in the actual figures until 2026 at the earliest.

László Koji, president of ÉVOSZ, draws attention to the importance of simultaneously stimulating supply and demand, stressing that the drastic price increases have resulted in the growth of real incomes lagging behind the increase in house prices.

They explain that household savings are not enough to finance the purchase of new homes, and loans are needed. However, with high interest rates, people are not taking out loans for housing, and are waiting for them.

Shortage of resources in the market

Today in Hungary, the primary constraint to housing management is not regulatory issues and capacity constraints, but the lack of resources - the summary continues, and then stresses that the ÉVOSZ proposals have been primarily aimed at increasing resources for several years. The financial opportunity needs to be expanded on the Community (public), private (residential) and business sides at the same time, the industry group believes.

Increasing public funding is seen as feasible by tackling undeclared work in the construction industry and housing renovations without contracts: the ÉVOSZ estimates that in 2024, some HUF 200 billion worth of housing renovation and construction could have been carried out under a verbal agreement. The VAT content and additional tax revenue of this contractor's service is about HUF 55 billion, which the state budget does not see, it has lost.

There is still power in the rural housing renovation programme

In order to stop the fall in housing construction in 2025, despite the unexpected rise in construction material prices in 2021-2024 and inflation, and to put housing construction and renovation on an equal footing, ÉVOSZ also offers proposals to the public, government and the industry.

ÉVOSZ proposes to extend the rural housing renovation grant scheme. This will avoid a wave of dumping orders and allow technical obsolescence to be eliminated at the desired pace, they point out. All building renovation grants and tenders should be designed exclusively in line with the requirements of the Energy Performance of Buildings Directive (EPBD), they stress. And the early extension of the programme to the working age and pensioner population will provide an opportunity to have renovated properties ready for the 2025 heating season, they add.

Interest rates on home loans above 5 percent are too high

To finance new housing construction, it is proposed that the MNB relaunch its Green Home Program. Despite inflationary trends, the interest rate on home loans should not be more than 5% across the board, and should be available for renovation regardless of age or having children.

The 5% level is a psychological limit for customers and for contractor borrowing.

Non-profit housing scheme proposed by ÉVOSZ

Because of the wide gap between the housing price and family income, it is proposed to introduce the so-called "Subsidised Non-Profit Housing Method". Under this method, the state or municipality can contribute to the development by providing the land and utilities, or by granting the right to build on it.

The development would be carried out by a non-profit organisation, ensuring lower-priced housing. Generating development can give a new impetus to housing. These apartments could be rented and bought within a certain period of time, becoming the owner of the property - proposes ÉVOSZ.

The re-regulation of housing cooperatives and condominium owners' associations, and the modernisation of their legal status, could contribute a lot to strengthening the responsibility of the predictable customer.

A 5-year building tax exemption for new residential construction is also proposed, as is a government incentive for municipal governments to do so.

Rental housing programmes are seen as one of the keys to the solution - public, municipal and private schemes

ÉVOSZ calls for the preparation and launching of a public or municipal rental housing programme, where the management, common costs and rent setting are under the control of the state and the municipality. At the same time, and in line with this, it is proposed to regulate rental housing as a form of investment.

They advise a reduced tax rate for rental services, which they see as a necessary step towards a more sophisticated rental market.

Predictability of aid programmes is important

ÉVOSZ stresses that it would serve to boost family home-building support programmes and, more broadly, housing construction and renovation both in terms of demand and contractor capacity if the conditions for subsidy and preferential VAT regulations were stable and predictable in the longer term. 

Currently, in many cases, demand waves are emerging in the housing market, influenced by subsidy and tax relief intervals. Long-term, stable predictable conditions could bring supply and demand into a steadily growing, dynamic balance. The 5% VAT system is proposed to be applied to new residential construction without time limits. Their proposal is currently guaranteed by the government until 2030, they recall.

Industrial housing could also be an option

As one of the concluding thoughts of the Communication, the development and production of industrialised housing construction and renovation technologies has started. These could be used to design and implement pilot projects that could put domestic enterprises in a position to take advantage of them, ÉVOSZ points out.

Finally, the organisation suggests that a long-term housing strategy and an action programme for its implementation should be drawn up by 2025: in terms of capacity, there are currently enough building materials and contractors to build and deliver up to 25,000 homes a year, they add.