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February 10. 2010. Current Situation and Outlook of the Real Estate Market
(based on surveys in January 2010)
GKI Economic Research Co. has been conducting quarterly surveys since spring 2000 in order to assess the plans, intentions and prospects of businesses, real estate developers, realtors and households on the real estate market. The research project has been supported by the trade magazine Ingatlan és Befektetés (Real Estate and Investment). GKI's Budapest Real Estate Market Index synthesizes the foreseeable situation of individual market segments (residential, office and retail space and warehouse markets), providing an overall picture of the real estate sector. The index and the partial indices reflect the outlook and expectations of market operators.
GKI Budapest Real Estate Market Index, 2002-2010
In January 2010, the GKI's Budapest real estate market index is at -29.2, reflecting no significant change from the previous quarter. Opeerators on the real-estate market do not expect a significant improvement in the forthcoming 12 month.
Office space market
Office developments reached historical its peak in the Budapest agglomeration in 2009. The survey results of the BIEF indicate a steady increase of the rate of vacant office area compared to the total floor area (22%). The survey results of GKI show a similar picture.
Occupancy rates on the Budapest office space market
| Type A (%) | Type B (%) |
|---|
| Pest | 75 (73) | 76 (77) |
| Buda | 73 (72) | 75 (76) |
The results of the previous October 2009) survey are shown in parentheses.
Budapest office space market index, 2004-2010
In East Hungary, average occupancy was 67 percent, compared to 74 percent in October. In West Hungary, the average of the same indicator was 69 percent, compared to 71 percent in October.
For the forthcoming twelve-month period, real-estate businesses expect some improvement in and around Budapest and the persistence of the currently strong buyer's market in provincial cities.
The retail outlets market
Retail space market index in Budapest, 2004-2010
Evaluation of the retail outlets market worsened in January 2010 in all regions.
For the forthcoming twelve-month period, real-estate businesses expect decline in East Hungary and the persistence of the current market situation in and around Budapest and in West Hungary.
Warehouse space market
Warehouse market index in Budapest, 2004-2010
On the logistics market, the average assessment has improved by January 2010.
For the forthcoming 12 months, no changes are expected in East Hungary, whereas a significant decline of the market is anticipated in the Budapest agglomeration and in West Hungary.
Residential market
Housing market index in Budapest, 2004-2010
The situation assessments concerning the Hungarian housing market became increasingly negative in each survey between July 2008 and July 2009. In October 2009 market assesements slightly improved in most segments compared to the previous quarter as a result of the recovery of the market.
In January 2010 the market assesement deteriorated in provincial areas but slightly improved in Budapest.
Assessment of the various housing market segments and expectations for the forthcoming 12-month period*
| Situation assessment | Expectation | Expected change |
|---|
| October 2009 | Januar 2010 | Change |
|---|
| Budapest | | | | | |
| Non-prefab condominium homes | | | |
| Buda, green belt | -48 | -32 | up | -34 | - |
| Buda, other areas | -48 | -34 | up | -34 | - |
| Downtown Pest | -41 | -50 | down | -42 | up |
| Pest, green belt | -45 | -42 | - | -40 | - |
| Pest, other areas | -45 | -47 | - | -42 | - |
| Prefab housing estates | | | | | |
| Pest, North | -55 | -50 | - | -50 | - |
| Pest, South | -50 | -50 | - | -50 | - |
| Buda | -45 | -45 | - | -42 | - |
| Single family homes | | | | | |
| Pest | -41 | -32 | up | -40 | down |
| Buda | -35 | -29 | up | -30 | - |
| Eastern Hungary | | | |
| Non-prefab condominium homes | -48 | -61 | down | -58 | - |
| Prefab housing estates | -55 | -72 | downdown | -72 | - |
| Single family homes | -53 | -58 | - | -58 | - |
| Western Hungary | | | |
| Non-prefab condominium homes | -53 | -60 | down | -60 | - |
| Prefab housing estates | -48 | -62 | down | -60 | - |
| Single family homes | -52 | -66 | down | -53 | up |
*/ balance indicators: weighted difference between the indices indicating the rates of oversupply and excess demand, with 0 reflecting balanced market conditions, negative values indicating a supply surplus and positive values signalling excess demand.
In Hungary, real estate developers and realtors have forecasted that there will be essentially no changes on the market during the forthcoming twelve months.
Households' plans to build, purchase or remodel homes
(4-quarter moving averages, thousand households)
| Quarter | Home construction or purchase | Home remodelling |
|---|
| Certain | Likely | Certain | Likely |
|---|
| 2002. 01. | 28 | 101 | 147 | 487 |
| 2002. 02. | 39 | 114 | 159 | 523 |
| 2002. 03. | 51 | 123 | 158 | 518 |
| 2002. 04. | 56 | 132 | 172 | 517 |
| 2003. 01. | 58 | 141 | 174 | 503 |
| 2003. 02. | 59 | 140 | 159 | 474 |
| 2003. 03. | 57 | 134 | 152 | 451 |
| 2003. 04. | 54 | 127 | 139 | 430 |
| 2004. 01. | 61 | 103 | 134 | 392 |
| 2004. 02. | 59 | 94 | 120 | 359 |
| 2004. 03. | 55 | 84 | 125 | 355 |
| 2004. 04. | 51 | 79 | 117 | 339 |
| 2005. 01. | 52 | 97 | 123 | 380 |
| 2005. 02. | 50 | 98 | 119 | 402 |
| 2005. 03. | 53 | 99 | 125 | 396 |
| 2005. 04. | 52 | 109 | 123 | 407 |
| 2006. 01. | 49 | 108 | 122 | 413 |
| 2006. 02. | 55 | 116 | 138 | 414 |
| 2006. 03. | 51 | 130 | 116 | 422 |
| 2006. 04. | 53 | 128 | 118 | 413 |
| 2007. 01. | 50 | 122 | 112 | 391 |
| 2007. 02. | 39 | 128 | 97 | 371 |
| 2007. 03. | 36 | 111 | 95 | 344 |
| 2007. 04. | 32 | 100 | 84 | 317 |
| 2008. 01. | 27 | 96 | 71 | 296 |
| 2008. 02. | 26 | 78 | 59 | 247 |
| 2008. 03. | 30 | 83 | 51 | 233 |
| 2008. 04. | 26 | 74 | 45 | 207 |
| 2009. 01. | 27 | 60 | 37 | 164 |
| 2009. 02. | 25 | 46 | 32 | 153 |
| 2009. 03. | 22 | 32 | 37 | 144 |
| 2009. 04. | 22 | 32 | 33 | 147 |
| 2010. 01. | 17 | 34 | 32 | 139 |
Source: GKI household surveys
According to the January 2010 survey data, household expectations for home building and purchase have further deteriorated from the previous quarter. In January 2010 the proportion of households certain to purchase or build a home in the next year again decreased. The proportion of those not being this certain in their intentions is slightly bigger. The outcome of this survey indicates the presence of some 17,000 definite home builder or buyer households during the next 12 months. A further 34,000 households plan such an investment during the next year but for the time being they are not certain in their deliberation.
Prices
Expectations regarding new property prices over the next twelve months
percentage changes compared with current prices)
| Budapest | Pest County | Western Hungary | Eastern Hungary | National average |
|---|
| Residential unit | -2 (0) | -1 (0) | 0 (0) | 0 (0) | -1 (0) |
| Office space | -1 (0) | 0 (0) | -2 (0) | 0 (0) | -1 (0) |
| Retail space | 0 (0) | 0 (0) | 0 (0) | 0 (0) | 0 (0) |
| Warehouse | -4 (0) | 0 (0) | -2 (0) | 0 (0) | -2 (0) |
The results of the previous (October 2009) survey are shown in parentheses.
Expectations regarding the prices of used property over the next twelve months
(percentage changes compared with current prices)
| Budapest | Pest County | Western Hungary | Eastern Hungary | National average |
|---|
| Residential unit | (-1) | (-1) | (-4,7) | (-5) | (-3) |
| Office space | -5 (-2) | -3 (-2) | -1 (-4) | -7 (-3) | -5 (-2,5) |
| Retail space | -4 (-2) | 0 (-2) | -2,5 (-5) | -3 (-3) | -3 (-4) |
| Warehouse | -5 (-2) | 0 (-1) | -4 (-1,5) | 0 (-3) | -3 (-2) |
| Building plots | -6 (0) | -2 (0) | 0 (-1) | 0 (0) | -2 (0) |
The results of the previous (October 2009) survey are shown in parentheses.
Expectations regarding existing property prices per square meter over the next twelve months
(percentage changes compared with current prices)
| Non-prefab condominium homes | |
| Buda, green belt | 0 (0) |
| Buda, other areas | 0 (0) |
| Downtown Pest | -4 (0) |
| Pest, green belt | -2 (0) |
| Pest, other areas | -3 (-2) |
| Prefab housing estates - Pest, North | -8 (-2) |
| Prefab housing estates - Pest, South | -8 (-2) |
| Prefab housing estates, Buda | -4 (-2) |
| Single family homes - Pest | 0 (-1) |
| Single family homes - Buda | 0 (0) |
| Budapest, total | -3 (-1) |
| Eastern Hungary | -3 (-5) |
| Non-prefab condominium homes | -2 (-5) |
| Prefab housing estates | -5 (-6) |
| Single family homes | -2 (-4) |
| Western Hungary | -3,3 (-4,7) |
| Non-prefab condominium homes | -3 (-5) |
| Prefab housing estates | -5 (-5) |
| Single family homes | -2 (-4) |
The results of the previous (October 2009) survey are shown in parentheses.
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