Housing completions in Hungary rose by 33.5% to 28,208 in 2020, an eleven-year record, the Central Statistical Office (KSH) said. But the number of home-building permits issued dropped by 35.8% to 22,556, continuing a decline started after the phase-out of a preferential VAT rate in force between 2016 and 2019.
Meanwhile, lawmakers have approved a two-year reduction in the home construction VAT rate to 5% from 27% from the start of 2021 as part of government measures to aid the economic recovery from the coronavirus crisis. The number of homes completed in the capital rose by 8.6% to 6,341, while the number completed in county seats and cities with populations of over 50,000 jumped by 55.3% to 7,900. Housing completions in smaller cities increased by 31.1% to 7,779.
Minister of Finance Mihály Varga, in a video message posted social media, welcomed the 34% growth in housing units in a single year, noting that growth had been strong in all geographical areas. Homes built by private individuals accounted for half of the total, Varga noted, indicating the effectiveness of the government’s home-creation scheme. The government expects the home-creation scheme expanded earlier this year together with a reduction in VAT on housing construction to 5% to give an added boost to construction and help restart the economy, he said.