Budapest will run out of properties with reduced VAT rates by 2021

The number of real estates with reduced VAT rates (5%) is rapidly decreasing. There are less than 3,500 left in the capital, and they are likely to disappear from the market by next year. With the housing market in decline, developers are waiting for the rust zone map.

Rust zones are usually former industrial or economic areas that have been disused or underutilised, and these are usually in a deteriorating physical condition and affected by environmental problems such as pollution.

Properties with higher VAT rates do not sell very good. Their share on the market increased from 40% to 46%, while sales dropped from 41% to 31%, hvg and vg report. Such properties are sold only in the more expensive neighbourhoods.

Most real estate developers are waiting for the rust zone map to come out, hoping that they will have an area that will fall into the zone. However, the details of state aids for the recycling of abandoned industrial areas announced at the beginning of summer are still unknown.

The new housing market in Budapest is in bad shape. This is partly due to the restoration of the 27% VAT rate, the economic recession due to the epidemic, and the decreasing supply. In the spring of 2020, fewer than 300 new homes were launched on the market, and several construction sites have been shut down.

Real estate prices started to decrease at the end of last year. Now, due to the coronavirus epidemic, demand is falling quickly, and not only for new but also for second-hand flats. The Budapest real estate market, the prices of which have been skyrocketing in the past few years, reached a turning point.

Source: www.hvg.hu; www.vg.hu