Housing is a “weak point” in Hungary’s economic policy, central bank governor György Matolcsy said in an article, and suggested that the government should come up with a housing strategy and set up “an organisation to promote a sustainable housing market”. In his article, published online at novekedes.hu, Matolcsy said that in the next decade Hungary would need all its potential to continue closing the gap with the rest of the European Union by an annual 2 percentage points.
Concerning the government’s housing programme launched in 2014, Matolcsy said that the scheme had serious flaws from the start: “It had no responsible owner within the government and it had no thoroughly considered strategy; it promoted demand but failed to support supply, and fuelled inflation”. The scheme was not coordinated with regional development policy, transport and construction projects, or relevant vocational training, Matolcsy added. The current housing policy and property market conditions “cannot be continued”, the governor insisted, arguing that the government’s “well-wishing” family support measures, aimed at boosting demand, have resulted in “soaring inflation” on the real estate market, with not enough properties to meet that demand.
Since 2014, property prices nationwide have increased by 104%, and by 184% in Budapest, Matolcsy said, adding that a 90 sqm home would now require 15 years of median income to buy. Budapest is the 6th most expensive capital in Europe in terms of property prices and rents, he said. Fully 80% of Budapest’s residents are home owners, while that ratio in Vienna is 22%, Matolcsy pointed out, adding that “this discrepancy dramatically impacts Budapest’s competitiveness”.