OTP RESIDENTIAL PROPERTY VALUE MAP 2013/1 As opposed to previous expectations, 2012 did not bring about a recovery of the residential property market. On the contrary, turnover was stagnating on a national level, while price levels continued to sink. Territorial differences continued to increase, as well: As for turnover, the share of Budapest and other large towns has been growing year by year, whereas demand for detached houses that make up most of the property portfolio of the countryside has been significantly contracting. In 2013 the market continues to look out for signs of recovery: state subsidies for families and interest rate subsidies on HUF mortgage loans available from this year on will hopefully positively influence market trends. In the present analysis of the OTP Value Map for Residential Properties we offer an overview of the territorial real estate processes of the past year based on the completed transaction data of 2012. Our study focuses on the development of the turnover and prices; through the OTP Residential Property Value Index the latter is presented in the context of a ten-year period. In addition, we study also changes in the composition of property-transactions and as such, that of the demand performed between 2003 and 2012. Brief introduction to the methodology of territorial price and turnover analysis Our data are based exclusively on accomplished residential property market transactions. Our source was the database purchased from the National Tax and Customs Office (NAV, previously APEH). In the area of Budapest the 160 postal code zones, whereas in the rest of the country including the capital 198 statistical microregions formed the territorial basis of our analysis. In order to make the NAV-database suitable for processing, first by creating territorial limits and relying on our experience we gradually filtered out the erroneously or incompletely registered transactions In order to reach the case number necessary to form regional average prices, in the case of areas with incomplete data, we applied polynomial interpolation to compensate for missing data. On the whole, in the course of 2012 turnover grew in Budapest but decreased in the countryside Although the Hungarian Central Statistical Office (KSH) that has exclusive full access to the transaction database of the National Tax and Customs Office has not yet released its final analysis of the 2012 statistics regarding the turnover of residential properties, on the basis of the database of OTP Mortgage Bank (compiled from the available data filtered according to the effective legal provisions) at the national level we can conclude a mild increase of roughly 1%. While the early final repayment wave of the first quarter resulted in an outstanding number of transactions, in the second half of the year this level could not be maintained even despite of newly introduced advantageous lending conditions, such as state subsidised HUF-mortgage loans and subsidies available for families. At the level of the counties, last year the number of sales transactions increased in 7 counties (exceeding 10% in Somogy, Vas, and after 2011 once again in Győr-Moson-Sopron), and decreased in 12 (see Diagram no. 1). The revival in turnover was quite spectacular in Western Hungary: this is where four of the most significantly expanding counties are located. Interestingly though, the three worst-performing counties are situated also in the 1
Trans-Danubian region. Thus the East-West demarcation line in turn-over that in 2011 was still well visible dissolved last year. Although on Map 1 we can distinguish some extensive darker and lighter areas, the picture becomes very mixed again, if we penetrate deeper than the county-level. Turnover grew in 93 districts, and decreased in 105 districts. Both Western (meaning the counties of Trans- Danubia and Pest, as well as Budapest) and Eastern districts are represented roughly equally in the most advantageous (displaying a growth exceeding 15%) and least favourable (showing off a decrease below 30%) categories. According to the statistics, turnover picked up most significantly in the districts of Bélapátfalva (Heves), Körmend (Vas) and Putnok (Borsod-Abaúj-Zemplén), although in the base year of 2011 all three areas had hit a long unseen low. Similarly, last year the biggest drop occurred in the district of Devecser (Veszprém), since due to the reconstruction efforts following the red sludge catastrophe the year 2011 generated an exceptional turnover volume. Map 1: Annual change of transaction number (2012, %) by microregions 2
20 15 10 5 0-5 -10-15 -20 Diagram 1: Yearly change of turnover per county(2012, %) Somogy Vas Gy-M-S Zala H-B Heves Nógrád B-K Csongrád Fejér Békés J-N-Sz Pest B-A-Z Baranya Sz-Sz-B Tolna K-E Veszprém Last year in Budapest the number of transactions grew by 7.4% to exceed 21,000. At the level of districts, the turnover grew in 16 areas (exceeding 20% in Districts no. VII, X and VI), and decreased in 7 (by more than 20% only in District XXIII) (see Diagram 2). Considering the fluctuation of turnover at the level of postal code areas, we could witness growth in 106 areas, decrease in 53 and stagnation in one. Interestingly, merely four postal code zones of Buda (H-1013, H-1038, H-1123 and H-1011) constitute the top category (displayed in Map 2, with the lightest colour referring to areas with a turnover increase above 30%). However, the other extreme (with a drop exceeding 15%) includes merely 5 postal code zones also from the right bank of the Danube (H-1031, H-1026, H-1025, H-1037 and H-1014). 3
Map 2: Annual change of transaction number (2012, %) by Budapest postal code zones 60 50 40 30 20 10 0-10 -20-30 -40 Diagram 2: Yearly changes of turnover per district(2012, %) VII. X. VI. XXI. XV. I. IX. XVIII. XII. XVII. IV. XIV. XVI. XI. V. XIX. VIII. XIII. XXII. III. II. XX. XXIII. 4
Active turnover in the Western areas and downtown Pest The intensity of turnover in the view of local specifications is expressed with the help of the Turnover Speed Index. This is a relative number that shows the ratio of properties sold within a given period (in this case, over the year 2012) compared to the actual number of properties for sale. (By processing the databases provided by the NAV and filtered in compliance with legal provisions, we can primarily demonstrate the territorial relations of the turnover speed). On the national level, in 147 districts the stock-proportionate turnover does not reach 1%. From the 51 districts with a turnover above 1%, 22 are located in Budapest (except for District XXIII) and 19 in the Trans-Danubian region or in the county of Pest. Also Map 3 distinctively shows a sliding level of turnover activity between West and East. From the 19 districts with the relatively lowest turnover (below 0.3%) 9 are located in Borsod-Abaúj- Zemplén and 3 in Szabolcs-Szatmár-Bereg, whereas from the 21 districts with the liveliest turnover (above 1.8%) besides the 14 districts of the capital area 3 are situated in Győr- Moson-Sopron county. Furthermore, also districts that are county seats can be clearly distinguished from the surrounding areas thanks to their livelier than average turnover. Map 3: Annual turnover speed (2012, %) by microregions Among the counties by far the most high-ranking continues to be Győr-Moson-Sopron, the only one with a turnover speed exceeding 2%, while on the opposite end, once again since 2011, the turnover of the residential property market was the least dynamic also last year in Nógrád (see Diagram 3). Compared to 2011, Veszprém county underwent the most 5
significant change, with an index contracting from 1.3% to 1%. The contrast between East and West can be seen also on the level of the counties. 2,4 2,2 2,0 1,8 1,6 1,4 1,2 1,0 0,8 0,6 0,4 0,2 0,0 Diagram 3: Turnover speed per county(%) 2011 2012 Gy-M-S Csongrád H-B Somogy Vas Fejér Veszprém Zala Baranya B-K-K K-E Tolna J-N-Sz Sz-Sz-B Pest Heves Békés B-A-Z Nógrád Since for Budapest we do not have any information based on postal code zones, for an analysis of turnover speed we relied on data broken down at the level of the districts. The two extremes are District no. XXIII with its 0.5%, on the one hand, and No. VII and VI, on the other, with their improvement of 1.2% and 3.6%, respectively (see Diagram 4). With some simplification we can say that Map 4 visualises the duality of the low-turnover marginal districts of Pest on the one hand, and the more active central districts with a relatively high turnover even despite the crisis, on the other. 6
Map 4: Annual turnover speed (2012, %) by Budapest districts 7
4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Diagram 4: Turnover speed per district(%) 2011 2012 VII. VI. IX. XIII. V. VIII. XIV. XI. I. III. X. IV. II. XII. XV. XIX. XVIII. XXI. XX. XVI. XXII. XVII. XXIII. OTP Residential Property Value Index: 14% nominal loss of value since the onset of the crisis The OTP Residential Property Value Index is an index cleared from the composition effect of territorial (district-level) sales ratios. The basis of our calculation was the year 2008 the last pre-crisis year, with the highest price-level in nominal terms, thus the striking downward spiral of the crisis becomes clearly visible, just like the trends of recovery having a positive effect on prices. On the other hand, we weighted the territorial average prices of a given year with the 2008 turnover of particular districts. A further reason for the standardisation, taking 2008 for a reference point in time, is the fact that up to 2007 the descriptive parts of the transaction database of the National Tax Authority (NAV) had been rather poorly detailed, however, in 2008 the quality of the data disclosure improved significantly. On the other hand, from the aspect of the residential property market, 2008 can be considered possibly the most regular year, by which the market had gotten over its boom and the period of large-scale property purchases with investment purpose. Presumably most transactions of that time had been motivated by private individuals intention to move into a new home. (With the territorial standardisation taking 2008 as a reference point, the OTP Residential Property Value Index is not distorted for example by the phenomenon that in 2009, in the course of the drastic 40% drop in turnover, the ratio of the most expensive areas, i.e. Budapest, and the counties Pest and Somogy, increased significantly.) In 2012 the OTP Residential Property Value Index sank by 2.2% within a year. Despite its gradual abatement, the total national nominal loss of value in the course of the four years of the crisis amounted to 13.8% (see Diagram 5). At present the nominal price level reminds us of 2003 2004. 8
110 Diagram 5: OTP Value Index for residential properties (nominal, net price change, 2008 =100) 105 100 95 90 85 80 82,3 88,1 88,6 92,0 96,6 100,0 97,1 90,6 88,1 86,2 75 70 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Price levels in Budapest sinking deeper than the nation average In 2012 on national level the average price of sold properties decreased by somewhat less than 1% in nominal terms, while the absolute price change was 2.2% within a year. Thus the average depreciation has been going on in a slowing pace for three continuous years. The market experienced a positive shift compared to 2011 in seven counties. Neither in this, nor in the case of the other extreme representing regions displaying the fastest price decrease could we detect any links to the geographical location (i.e. the East-West demarcation) (see Diagram 6). Although we maintain our view that there is no necessary causal link between changes in prices and changes in the turnover, comparing Diagrams 1 and 6, it is remarkable that the counties Vas, Somogy and Hajdú-Bihar appear among the first five regions with respect to both indexes, while Tolna and Komárom-Esztergom are listed among the last ones also based on last year s price and turnover fluctuations. At the level of districts, in 121 of them price fluctuations were negative over the past year. Average prices decreased by more than 10% in 31 districts including 4 in Borsod-Abaúj- Zemplén, while 3 were situated in each of the counties of Bács-kiskun, Baranya, Fejér, Pest and Somogy, what is more, also Districts VIII, X and XXIII of the capital belonged to this category (see Map 5). The data showed a price increase exceeding 15% in 16 districts, from which 2 were situated in each of the districts of Somogy, Jász-Nagykun-Szolnok, Pest and Zala. All in all, we can discover few territorial regularities on the map of the districts. 9
Map 5: Annual price change (2012, %) by microregions 6 Diagram 6: Annual price changes per county(2012, %) 4 2 0-2 -4-6 -8 Vas Békés Veszprém Somogy H-B B-K Heves Csongrád Sz-Sz-B Pest Fejér Gy-M-S Baranya Zala J-N-Sz Tolna B-A-Z Nógrád K-E Compared to 2011, last year the decrease of nominal average prices exceeded the national average: the total measure of price changes was -3.8%, with a net change of -3.4%. Looking at Diagram 7, we can see that merely 3 districts experienced a mild price increase (namely Districts XII, XIII and XXI). At the same time, the almost 17% price decline of District XXIII is a classic example of the compound effect: In 2011, due to an outstanding number of sold newbuilts (although this was significant only in terms of the mentioned district) this was an area undergoing a significant jump in average prices. Therefore last year s contraction took off from a high basis. 10
In 2012 the price of sold properties grew in 40 postal code zones. Map 6 shows 10 postal code zones (6 in Buda and 4 in Pest) where prices grew by more than 4%. At the same time, from the 39 zones that experienced a price decline exceeding 8% only 6 are located on the right side of the Danube. All of District XXIII, furthermore, in District XV 5 zones from the 8, in District VIII 5 zones from 9, while in No. XVIII 4 from 7, and in District V 3 from 6 zones belong to this category. Map 6: Annual price change (2012, %) by Budapest postal code zones 11
2 0-2 -4-6 -8-10 -12-14 -16-18 Diagram 7: Annual price changes per district(2012, %) XII. XIII. XXI. XI. IV. VII. XIV. XIX. IX. XVII. II. III. VI. XX. XV. I. XVIII. V. XXII. XVI. X. VIII. XXIII. Increasing price-differences at the district-level In 2012 the average price of properties sold nation-wide was HUF 11.65 million (HUF 9.63 million excluding Budapest), with an average value of HUF 11.23 million for flats only (HUF 8.79 million in the countryside). In the territorial comparison it is reasonable to use typical average prices. Somogy continues to rank as number one at the level of counties with its average price of HUF 207,000/sq m. With a difference of HUF 16,000, Somogy is followed by Pest, the next two in the list being Hajdú-Bihar and Győr-Moson-Sopron (in reversed order compared to 2011, with average prices of HUF 169,000 and 164,000/sq m (see Diagram 8). Nógrád is the only county that does not reach the HUF 100,000/sq m price level, while in the category below HUF 120,000/sq m we can find Borsod-Abaúj-Zemplén, Komárom-Esztergom, Békés and Jász-Nagykun-Szolnok. At the level of districts (apart from the districts of Budapest), the most expensive areas continue to be concentrated around the capital and Lake Balaton: last year from the 198 districts only 22 boasted an average price above HUF 200,000/sq, from these 13 are Districts of the capital, 5 are located in the county of Pest, 3 around Lake Balaton, while the 18 th ranking belongs to the district of Gárdony. Fonyód is the only district in the countryside whose average price exceeds HUF 300,000/sq m. In addition, the districts of Siófok, Balatonfüred and Budakeszi are the ones whose average price is above the average price of whole Budapest. The price-increasing effect of the large number of new-built flats sold on the shore of Lake Balaton is a key factor here. In 35 districts average prices do not reach HUF 80,000/sq m. From these 9 are located in Borsod-Abaúj-Zemplén, 4 in Baranya, and finally 3 in Szabolcs-Szatmár-Bereg, Nógrád and Somogy county each (see Map 7). Compared to 2011, the absolute difference between the lowest and highest county averages displayed a mild growth (2.6), whereas that of the districts in the countryside significantly sky-rocketed (10.1). As a rule, districts with a county seat do distinguish themselves with higher prices than their surroundings. Interestingly, the 12
cheapest districts of Tolna and Pest counties (i.e. Tamási and Nagykáta) are more expensive than the most pricy districts of Balassagyarmat in Nógrád county. Map 7: Average price by microregions (2012, HUF/sqm) 220000 200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 Diagram 8: Average prices per county(huf/sq m) 2011 2012 Somogy Pest H-B Gy-M-S Vas Veszprém Sz-Sz-B B-K Baranya Fejér Csongrád Zala Tolna Heves Békés J-N-Sz K-E B-A-Z Nógrád Last year in Budapest properties were sold at an average price of HUF 14.1 million and flats at an average price of HUF 13.76 million. Considering average prices, District no. II was the most expensive (HUF 358,000/sq m), followed by District no. XII (HUF 342,000/sq m), which compared to 2011 overtook District no. V. The cheapest properties were available 13
in District XXI, in Csepel, for an average price of HUF 161,000/sq m. This area is somewhat outperformed by Districts no. XV (HUF 163,000/sq m) and XXIII (HUF 168,000/sq m) (see Diagram 9). At the level of the Districts the multiplier between the highest and lowest prices underwent a mild decrease to 2.2, whereas the difference between average prices of the postal code zones is 4.3. The least expensive zone was no. H-1157 (the housing estate of Újpalota) with a price of HUF 143,000/sq m, while the most costly area continues to be the Castle (H-1014) with HUF 616,000/sq m. The most expensive postal code zone of the Pest side, which is 11 th on the list of the capital, is located in Lipótváros (H-1051, HUF 351,000/sq m), whereas the cheapest of the Buda side is 23 rd on the list from the back (H-1039 Békásmegyer, HUF 168,000/sq m). Zone H-1153 is closest to the average Budapest price of HUF 247,000/sq m. Map 8 with its colouring reflecting price levels of the capital should not surprise anyone familiar with the property market of Budapest. Map 8: Average price by Budapest postal code zones (2012, HUF/sqm) 14
400000 350000 300000 250000 200000 150000 100000 50000 0 Diagram 9: Average prices per District(HUF/sq m) 2011 2012 II. XII. V. I. XI. XIII. IX. VI. XIV. III. XVI. VII. XXII. VIII. XIX. IV. XVIII. XX. XVII. X. XXIII. XV. XXI. Contraction in the turnover of houses, increasing share of Budapest and other cities We consider it interesting to examine over a longer period of time how the composition of the property-transaction database of the National Tax Authority (based on different parameters, including location) has evolved over the past years. Of course, spectacular, trend-like processes can be tackled especially in the changes in demand of the years following the onset of the crisis. Diagram 10 indicates a large-scale decrease in the share of houses (detached, semidetached and terraced houses). In pre-crisis times the sale of houses peaked at 52% within all property sales. This number had sunk to 40% already by 2008, what is more, the past four years brought along further contraction, thus last year less than one in four sold properties were houses. Since 2008 the sale of flats in condominiums has come to outperform houses not only in Budapest, but in each and every county, displaying the most striking numbers in Hajdú-Bihar and Szabolcs-Szatmár-Bereg (the share of flats sold grew from 46% to 71% and from 30% to 55%, respectively). At the moment, houses hold the lowest transactional share: apart from the exceptionally low performance (below 5%) of Budapest, the two other extremes are Komárom-Esztergom (20%) and the county of Pest (51%). 15
55 50 45 40 45 49 Diagram 10: Share of houses from all property transactions (%) 52 47 48 40 35 30 25 20 29 24 26 25 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 A direct cause of the declining share of houses is that due to the crisis less and less customers are willing to take either the greater responsibility that a house-purchase involves, calling for much greater circumspection and determination, or the longer-term financial commitment associated with the higher purchase and maintenance price of houses compared to flats. This altogether channels the anyway shrinking demand towards flats. At the same time, another indirect cause of the phenomenon can be seen from Diagram 11. Namely, that since 2008 within the national turnover of flats sold, the share of Budapest has grown significantly (from 24% to 39%), what is more, nowadays flat purchases weigh heavier even in cities with county rights and county seats. At the same time, the total rate of towns and villages constituting the greater part of the portfolio of detached houses sank from 48% to 30%. In 2012 the rate of villages with respect to turnover was lowest in the county of Hajdú-Bihar (7%), and the highest with 38% in Nógrád. 100% 80% 60% 40% 20% 0% Diagram 11: The share of settlements with different legal status from all residential property transactions (Budapest/county seats/other towns/villages) 19 24 27 23 22 20 14 11 12 11 26 26 27 21 29 21 27 28 28 23 23 29 28 28 23 26 27 24 24 27 21 21 19 31 30 31 35 38 37 39 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Budapest mszh / mjv város község Note: Due to the rounding, the numbers of the yearly ratios may add up to a sum different from 100. 16
It seems obvious that since 2008 the increased demand for cheaper flats which are likely to be also smaller should be reflected also in the composition of the sales and purchases. As shown in Diagrams 12 and 13, these parameters were analysed first focusing on flats in apartment houses. From the aspect of size, the distribution of flats has been rather stable since 2003, we could not detect any extraordinary values or trend-like processes. Diagram 12: Distribution of flats sold, based on size 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 7 7 6 7 6 6 7 7 7 7 10 9 9 9 10 9 10 10 10 10 28 27 28 28 27 29 27 28 28 28 35 35 36 36 37 37 35 35 36 35 20 22 20 19 20 19 20 20 20 20 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 40 m2 alatt 40-54,9 m2 55-69,9 m2 70-85 m2 85 m2 felett Note: Due to the rounding, the numbers of the yearly ratios may add up to a sum different from 100. Nevertheless, the impact of the crisis does manifest within the price categories. In the course of four years, the rate of the cheapest category (in our analysis below HUF 6 million) doubled from 10% to 20%. An important factor exerting an influence on this process could be the trend of the increasing rate of cheap flats in housing estates, as already presented in detail in our Value Map 2012/2 for residential properties. The same tendency of decreasing rates can be observed also in the price categories between HUF 6 to 15 million, thus in the price categories below HUF 15 million we can clearly see a decline in the level of demand (i.e. in clients preferences and financial potential). At the same time, in the segment above this level the rate of sales and purchases remained stable, which suggests that clients looking for properties above the mentioned price level are less sensitive to the negative impact of the crisis. 17
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Diagram 13: Distribution of flats sold, based on price categories 4 5 4 5 5 5 7 6 6 5 9 9 9 7 5 5 10 11 12 13 10 10 10 22 23 23 24 26 26 22 22 21 24 40 39 42 43 40 42 37 41 40 37 22 19 17 13 12 10 13 16 18 20 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 6 millió Ft alatt 6-9,9 millió Ft 10-14,9 millió Ft 15-19,9 millió Ft 20-25 millió Ft 25 millió Ft felett Note: Due to the rounding, the numbers of the yearly ratios may add up to a sum different from 100. Diagrams 14 and 15 show the same parameters, filtered for properties with detached houses. The period between 2008 and 2012 witnessed the same trend both from the aspect of distribution and of size: a rise in the rate of the largest (120 sq m and above) and most expensive (above HUF 25 million) properties. The reason for this is most probably that despite a drastic decline of demand for detached houses, as for clients less affected by the crisis, demand has become restricted to properties that are indeed of good quality and in sound condition, not to mention potential unique features. In other words, clients who nowadays are considering buying a house, tend to opt for spacious, high-value properties. In parallel with this, the statistics show a drop in the turnover of smaller-size and cheaper houses, yet not in the smallest and cheapest category. 100% 80% 60% Diagram 14: Distribution of houses sold, based on size categories 11 11 11 12 13 23 22 24 25 24 19 19 21 23 26 23 21 22 22 21 40% 41 43 45 43 43 38 36 32 33 32 20% 0% 25 23 20 20 20 19 24 25 22 21 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 60 m2 alatt 60-89,9 m2 90-120 m2 120 m2 felett Note: Due to the rounding, the numbers of the yearly ratios may add up to a sum different from 100. 18
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 36 40 40 Note: Due to the rounding, the numbers of the yearly ratios may add up to a sum different from 100. Hoping for further recovery Diagram 15: Distribution of houses sold, based on price categories 5 5 5 6 7 6 10 11 6 6 13 14 16 10 9 9 8 10 10 8 9 8 11 10 17 16 15 11 11 12 17 18 11 19 18 18 17 27 24 25 17 27 28 29 26 26 24 23 32 30 24 26 23 26 23 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 6 millió Ft alatt 6-9,9 millió Ft 10-14,9 millió Ft 15-19,9 millió Ft 20-25 millió Ft 25 millió Ft felett Seeing the most dominant trends of last year stagnating turnover, a further decline in prices and a record low of construction activity in the field of residential properties we have good reason to assume that the residential property market finally touched bottom, yet a quick recovery is still delayed by the lack of a powerful and solid economic revival, a predictable labour market, the improvement of lending conditions and a strengthening of the exchange rate of the HUF. However, this year we hope for positive signs from the extended availability of social benefits for families with children as well as of HUF-loans with state-subsidised preferential interest rates. Extending the availability of social benefits for families with children to sale purchases and renovations of used flats that constitute 95% of all property sales could jumpstart the market and activate a significant demand estimated to have been suspended since the onset of the crisis and to amount to some 200,000 properties. Although the mentioned social benefit linked to the number of children mainly targets young parents, its beneficial effect will be felt well beyond these constraints. Namely, flats offered for sale by owners who due to the crisis and thus to their deteriorating financial situation are forced to move into smaller/cheaper flats will hopefully be matched by a demand revived by the availability of social benefits. With respect to the above factors, in 2013 we expect a mild increase in the turnover of the residential property market; under favourable conditions the number of transactions may again exceed 90,000. From a demographic point of view, the fact that the age group of the currently 32-38 year olds (the grandchildren of the baby-boomers of the early 1950 s, in Hungary known as the Ratkó-generation) is the most numerous gives us reason to be optimistic in the short term. Therefore members of this generation, typically starting to have children in these years, are 19
likely about to purchase their second or third, and probably larger flats. However, we have no data regarding the number of the characteristically young, but in any case working age Hungarian citizens who have recently moved abroad in the hope of material well-being. Their potential (yet thus lost) demand may exert an offsetting effect. Keeping in mind that the development of prices may show great variations based on location and type of property, all in all, compared to 2012, in 2013 we do not expect a significant price decline, nor do we forecast any material price rise. The latter would, namely, presuppose a remarkable revival of (partly deferred) demand. Furthermore, in addition to the sustained sentiment of uncertainty on the market, factors dampening rising prices are the high bargaining potential, rich supply and the price pressure generated by newbuilts. 20