“If it depends on it, I guarantee that inflation will be around 3 percent in the future, and the government will do everything to prevent it from rising. But then is 5 percent worth it?” – Márton Nagy asked Sándor Csányi at the Portfolio.hu Budapest Economic Forum event after the president and CEO of OTP spoke about the “voluntary” 5 percent home loan APR ceiling requested from the banks, and that, in addition to the request, he did not hear the what kind of guarantee does the government give on inflation, even though it is related, said Csányi. According to the Minister of National Economy, there is a housing crisis in Hungary, and in addition to the government, the banks also have a role to play in solving it.
“I don’t want to talk about the banks – although I could, since we have worked together for the past 22 years,” said the minister, and then praised the financial institutions. According to him, it appears that the Hungarian banking system is stable, profitable and lends – so it fulfills its task. Thanks for that. According to Márton Nagy, the extra burdens and their persistence are related to the changing environment, it does not really depend on who is the prime minister and who is the economy minister.
Growth will jump next year
The III. quarterly GDP will not reach the 1.5 percent expected by the market – the NGM expects positive data close to 0. Thus, annual growth may also be weaker than expected. According to Márton Nagy, the main reason for this is the 4-5 percent shrinkage of the industry. It is positive that the retail turnover is growing steadily by 4 percent, within which food trade is expanding by 7-8 percent. This indicates that the domestic economy has already recovered – the motive of mistrust may be resolved. A minister of national economy is primarily responsible for this. The German economy is more likely to be responsible for our external economic weaknesses – there economic growth will be negative this year as well, and only 1.1 percent growth is expected next year.
According to Márton Nagy
In the first quarter of 2025, there will be a big jump in GDP growth – the expectation is 3.3 percent – and the base effect will contribute to this. After that, we will rise to between 3 and 4 percent, and later the increase may go above 4 percent, according to the minister.
We have defeated inflation, and there is no need to fear its return. The consumption expenditure of households is already rising, although the turnover of foreign online webshops is still interfering with this, but the situation here is stable and improving.
Investments remained due to the weakness of the foreign market and the stagnation of domestic consumption – but the latter is already showing improvement. Moreover, in 2025, many factories will start operating, which may also throw the investment data, the minister pointed out.
As a result of the above, the government is planning a 3.4 percent increase next year, but this is a conservative forecast, Márton Nagy opined.
The government prepared a new economic policy action plan, which has 3 elements:
According to the OECD rating, the housing problem in the capital is critical
Regarding the first point, the provision of housing, the minister spoke about the need to build at least 25,000 new apartments every year. In comparison, a maximum of 14,000 new apartments will be built in 2024. Meanwhile, the number of home purchases increases – this increases housing inflation. Since Covid, the national housing price index has increased by 64 percent, the Budapest one by 44.5 percent, and the rent index has increased by 41.5 percent since 2020.
According to the government, affordable square meter and sub-rental inventories are needed – housing inflation is drastic and degrades other indicators as well.
In Budapest, but also in Debrecen, you need 12 years of income to buy a 75 square meter apartment.
If a young person wants to rent an apartment in Budapest, 40-60 percent of their income must be paid for the apartment. According to the OECD, there is a housing crisis above 30 percent, and above 40 percent this value is critical – all this means that very fast action is needed
– the minister compared the Hungarian situation internationally.
According to him, there are 800,000 households in Budapest, of which 140,000 live in rented apartments – this is 18 percent. (Another 26,000 apartments are interested in short-term rental housing.) This data – at least from the perspective of the capital city – refutes the fact that housing in Hungary is based on ownership – moreover, this number is filtered from NAV data, so it is official data, the reality and the crisis it could be worse. Budapest therefore needs intervention – although this should not primarily be the government’s task.
Because of the above, the government planned a 10-element housing plan.
These are specific steps for Budapest:
- Airbnb’s conditions will be tightened – the social consultation will start next week – there will be a 2-year moratorium on new licenses, and a 4-5 times tax increase is planned.
- Regulation of apartment rents and contract terms.
- Establishing an adequate number and quality of dormitories – according to the minister, this is not the government’s task, but the universities’. “We would also help separately, but in recent years, there simply hasn’t been any development that could be supported,” indicated Márton Nagy.
National measures:
- They are advertising a housing program that treats the housing problems of young people.
- A rural home renovation program will be introduced.
- 50 percent of the benefits received on the SZÉP card can be temporarily used for renovation.
- They also allow the temporary use of voluntary pension fund savings for housing purposes. In relation to the above two points, the minister indicated: there will be no change in the eligible renovations compared to the conditions of the previous home renovation program – the funds can be used for the same works.
- They are working out a housing subsidy that can be given by the employer with a tax discount, in which the employer’s subsidy can be used for apartment rental and loan repayment.
- Maintaining the 5 percent rate of VAT on new apartments.
- Introduction of the 5 percent voluntary home loan interest ceiling.
You will have the average gross salary of 1 million
Regarding the second program element, increasing the purchasing power of incomes, the minister reminded that “there is no question that we have built a very strong work-based society, but we cannot create another 1 million new jobs”. Regarding wages, the 2016, 6-year wage agreement helped a lot.
In connection with the assessment of the current situation, he spoke about the fact that inflation ate up incomes. After the decrease in the rate of monetary deterioration, real wage growth is now 9-10 percent, but this is unsustainable. The government expects real wage convergence of 5 percent. With this, a minimum wage of 1,000 euros and a gross average salary of HUF 1 million can be achieved by 2028, the minister indicated.
According to Márton Nagy, both employers and employees agree that the minimum wage can reach HUF 400,000 (€1,000) by 2027.
The average gross salary – including all payments from the employer to the employee – is currently HUF 651,000. This may rise to 971 thousand by 2028. But the basis of growth must be based on inflation and economic growth together – if we were to raise incomes without growth, it would lead to a disaster in the lives of companies, the minister emphasized.
The following points can bring you closer to the fulfillment of the above goals:
We need bigger and not more SMEs
The basis of the Sándor Demján program, which helps the rise of domestic SMEs, according to the Minister of Economy, their leap in size, is provided by the data, according to which the trap of large exporting companies is still present. Domestic large companies account for 17 percent of exports, SMEs only 10 percent. We have only 16,000 export-capable SMEs.
940,000 of the 977 companies operating in our country are micro-companies – this is where the companies need to be raised, which is why we need to make a leap in size. There is no need to increase the number of businesses, existing companies need to be developed.
The capital situation of 20 percent of domestic SMEs is critical, they are not even creditable. This is a particularly serious problem in the construction industry, trade and partly in agriculture.
According to the minister, the fact that the central bank currently has 3,000 billion corporate loans on its balance sheet will appear as an additional, soon-to-be-stressful problem – this is threatening because they expire. NHP loans run at 2.5 percent, NKP bonds are drawn at an average level of 4 percent. According to the minister, the new management of the MNB will face serious tasks during the renewal.
In the framework of the Sándor Demján program, on the capital support page
- the SME capital financing program is announced – this is a 100 billion program where companies are given a 30 percent capital increase. Kavosz is also tasked with judging. To be sure, real estate investment cannot be realized with capital;
- Exim loan and NTH capital program to support investment is launched.
It will be possible to apply for non-refundable support
- in the 1+1 SME investment stimulus support program and
- within the framework of the “Each business should have its own website” program.
It will help you on the credit side
- lowering the interest rate on investment loans of the Széchenyi Card Program to 3.5 percent,
- and Eximbank’s export incentive loan program.
In the Union territory
- the minister promised to speed up the EU programs for business development,
while in the regulatory area
- steps aimed at reducing the administrative burden of SMEs are expected – an example of this was the reduction of the audit value limit.
(Cover photo: Márton Nagy on September 17, 2024. Photo: Zsófi Szollár / Index)
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