The Hungarian real estate market undoubtedly is in its golden age. Both the home and the business markets are behind fertile years and the prospects are also favourable. In April of 2019, the GKI real estate indices for Budapest and Hungary stood at 12 and 9 points respectively. The national index decreased by 1 point, the Budapest index rose by 3 points compared to the previous (January 2019) survey.
In the first two months of 2019, the growth rates of the most important sectors of the Hungarian economy accelerated compared to last year. However, domestic economic expectations reached their two-year low in April. The EU’s economic sentiment index fell to its level measured three years ago, whereas the German business confidence index dropped to its level registered two and a half years ago. Various international growth forecasts suggest that the EU is slowing down in 2019.
While in the first quarter of 2019, the GKI economic sentiment index fell only slightly month-over-month, its decline in April exceeded its total drop in the previous three months. Thus the GKI economic sentiment index dropped to the level recorded about two years ago, which was otherwise high. The deterioration in April, similarly to the previous two months, was due to business expectations as the consumer ones had been improving for the third month and they are now more favourable than at the end of last year.
Hungary’s GDP expanded by 5.1 per cent in the second half of 2018 year-on-year and by 4.9 per cent in 2018. This high growth rate has been unprecedented for 15 years. Due to the higher than formerly expected GDP growth rate and the stimulation measures of the government such as the family protection action plan, GKI raised its forecast for 2019 to 3.5 per cent in spite of deteriorating global projections. GDP growth has been driven by domestic demand for three consecutive years whereas the contribution of EU transfers to the acceleration of economic growth has moderated significantly. Inflation is picking up, and the pro-cyclical nature of Hungary’s economic policy is easing rather than disappearing. The corrections of economic policy do not touch the substance of the Hungarian model.
Although the GKI economic sentiment index was rising constantly in the last quarter of 2018, it declined slightly but steadily during the first quarter of 2019. The deterioration in March, as in February, was attributed to unfavourable business sentiment since consumer expecta-tions improved somewhat both in February and March, and they reached the level record-ed at the end of 2018. Hungarian economic actors continue to show strong optimism.