There are an estimated four million flats in Hungary. According to the experts, the lifetime of an apartment is usually 100 years, whereupon it needs to be replaced by a new one. Following this logic, 40,000 new flats per year should be added to the existing residential portfolio. And this is without even mentioning the quality of many apartments, especially in the northeast of the country, which remind us of the conditions immediately after the First World War. Such housing will never last for the expected 100 years.
A lot of things are not working well in this area, so the construction industry has been longing for its own ministry for a considerable time. The struggle seems hopeless without central coordination. In the last century the average number of new flats handed over was always more than 50,000 yearly in the 1960s, even 100,000 in the “golden era” of the 1970s (particularly 1975), but in the 1980s there was a dramatic drop back to around 50,000 per year.
The change of regime, although it promised fully equal chances, meant for many families a new kind of uncertainty – fewer continued to dream of owning their own apartment any more. By 1993 the number of newly built flats decreased to half of the total in the 1980s, to 21,000 a year. For the new millennium the first Orbán government announced that the construction of apartments would be supported by significant state grants, which resulted at most in building 44,000 new homes a year (in 2004). The program was not continued by the Socialists due to the burden it imposed on the state budget.
The popularity of foreign-exchange loans managed to keep the market afloat for a while but with the outbreak of the global financial crisis the seemingly harmless change from forints to such loans proved to be an evil trap. Today more than 100,000 families live in homes for which they are unable to pay the instalments any more. This is giving the construction industry some time to rest because the banks are gradually taking this housing portfolio to the market at bargain prices. The result of all the above: in 2012 hardly over 10,000 new apartments were handed over.
Whoever thought at that point that this was the end of the line was sadly mistaken because 2013 brought another poor result of 7,300 new flats, according to the Central Statistical Office (KSH), and at the same time the number of construction permits fell 30%. With so little construction ahead, we cannot hope for improvement in the medium term.
Even the KSH did not fail to notice that last year the housing construction market reached only one fifth of the volume in 2008. The big project developers practically disappeared from these statistics following the crisis as people give up their dream to establish an own home.
This year could bring a change in the trend; at least, first-quarter figures by KSH for the first quarter seem hopeful. There were 1,700 apartments built between January and March nationwide; only a fraction of the number necessary to achieve the desired 40,000 but still a significant improvement on 2013 – about one and a half times as many. The number of applications for construction permits is moving at a somewhat less impressive pace (up 20%), but still it shows that construction of flats is moving away from its nadir.
The fact that almost one third of the new housing units are in Budapest, where five out of six apartments are renewed by real estate developers, is somewhat sobering. Obviously the optimists see rising demand behind the construction jobs. This optimism evaporates a little when we consider that their average size is less than 60 square metres. More than 400 flats were added to apartment buildings in this way within three months, while there was only one new residential park established, even though residential parks in Budapest represent quality by themselves.