In October of 2019, the GKI real estate indices for Budapest and Hungary stood at 7 and 8 points respectively. Budapest index decreased by 6 points, the national index went down by just 1 point compared to the previous survey (in July 2019). The capital index went down by 4 points, the other one practically did not change compared to the survey made one year earlier. Data of the present survey refer to a negative turnaround on the housing market. The era of soaring prospects and rising prices is now behind us. At the same time, there is nothing in the business real estate market, and especially in the office market, to suggest that the golden age is coming to an end.
The Hungarian economy grew by 4.9 per cent in the second quarter of 2019, faster than expected. This was the highest growth rate in the EU. However, the slowdown, if only to a very small extent, has begun (the growth rate was still 5.3 per cent in the first quarter). According to the data of the first half of 2019, growth of the Hungarian economy is driven by investments and consumer demand. Domestic demand grew by 5.5 per cent, faster than GDP (by 5.1 per cent). The foreign trade surplus continued to go up in the second quarter, and the slightly increasing surplus of services could not offset the significantly deteriorating merchandise trade balance. GKI’s current forecast of the annual GDP growth rate of about 4.3 per cent in 2019 is in line with the recent expectations of the government and the National Bank of Hungary.
The GKI economic sentiment index fell to its two-and-a-half-year low in September, within which business expectations plummeted to their lowest level in the past three years. However, consumer expectations improved slightly, they were more favourable than this last time in summer 2002. According to the empirical survey conducted by GKI (www.gki.hu) with the support of the EU, the fall of the business confidence index in September was significant (albeit compared to its temporarily increased August level). Such a high deterioration in a single month has not been seen for over ten years.
According to April-May data, the growth rate of the Hungarian economy started to slow down in the second quarter compared to the record high dynamism of the first quarter. However, the extent of the slowdown is lower than expected. In addition, the weather seems to be more favourable for agriculture than it was in the past. As a result, GKI raised its 2019 GDP growth forecast from 4 per cent to 4.3 per cent. However, in the second half of the year, the growth rate is expected to slow down significantly, to around 3.5 per cent. An important reason for this is that due to the high level of EU transfers last year, their investment stimulating effects are decreasing this year and the increase of the purchasing power of households is also slowing down. In addition, the EU’s economic sentiment index is almost at its three-year low; the Hungarian one is at its two-and-a-half year low and the German business confidence index, which is very important for Hungary, is at its five-year nadir.
The GKI economic sentiment index rose in August compared to its low of almost two and a half years in July. According to the empirical survey conducted by GKI (www.gki.hu) with the support of the EU, improvement was registered not only in business expectations but also in thebconsumer confidence index, which had been fluctuating in recent months, and now reached its peak for more than a year.