Published: December 18 2023
The construction industry in Hungary has faced significant challenges this year, with a decrease in production and a bleak outlook for the future. Despite a slight increase in October, the overall trend has been negative, with a 4.2% drop in production for the first ten months of 2023. The industry is also grappling with rising prices and a decline in demand, leading to the closure of brick factories and a slowdown in the construction of newly built apartments.
Challenges in the Construction Industry
- Decreasing Production: The construction industry has experienced a notable decline in production, with a 4.2% drop in the first ten months of 2023. This decline has been consistent, with only four months in the past one and a half years showing an expansion in production.
- Rising Prices and Decline in Demand: Prices in the construction industry have seen a significant increase, with a shocking 40% rise that has affected the market. This has led to a decrease in demand, as consumers and businesses face higher costs. Brick and tile product prices have especially suffered, with a nearly 50% decline.
- Closure of Brick Factories: The decline in demand and high costs have resulted in the closure of all brick factories in Hungary. Cost increases and additional burdens imposed by the government have contributed to the closure.
Prospects for the Future
- Slowing Demand and Restrained Budget: The construction industry is facing slowing demand, especially in the construction of newly built apartments. Rising interest rates, reduced support, and decreasing purchasing power, as well as a restrained state budget due to held-back EU funds, have further compounded the challenges in the sector.
- Potential Solutions: Industry actors are hoping that reductions in interest rates and state support programs, such as the Family Home Creation Discount (CSOK Plus) and the Residential Building Modernisation Program, can help turn the situation around. However, the industry's future remains uncertain, with a significant decrease in building permits for new homes.
The construction industry in Hungary is facing an uphill battle, with decreasing production, rising prices, and a decline in demand. While hopes remain for potential solutions through government support programs, the industry's future remains uncertain as challenges persist.
Questions & Answers
What has been the trend in the construction industry in Hungary this year? The construction industry in Hungary has been experiencing a decrease in production for most of the year.
Was there any improvement in October for the construction industry in Hungary? In October, there was a slight increase in production compared to the previous year, but it was still minimal.
How much did production drop in the first ten months of 2023 in Hungary? Production in the construction industry dropped by a total of 4.2 percent in the first ten months of 2023.
How much money was spent on building construction and other constructions in Hungary? Out of the all-encompassing production of roughly HUF 660 billion (EUR 1.7 billion), around HUF 400 billion (or a little more than EUR 1 billion) went into building construction, while HUF 260 billion (around EUR 680 million) was used for constructions other than buildings.
What is the current order backlog in the Hungarian construction industry? The sector's order backlog is valued at HUF 2200 billion (EUR 5.7 billion), but this represents a drastic drop of more than 30 percent compared to the same month of the previous year.
What has been the impact of price hikes in the construction industry in Hungary? Price hikes in the construction industry have driven up the market by 40 percent, resulting in struggles for both suppliers and manufacturers. Building prices have dropped significantly, with some products experiencing more than a 30 percent fall and brick and tile product prices nearing a 50 percent decline.
Why have brick factories in Hungary closed in the autumn? The closing of brick factories in Hungary can be partially attributed to cost increases and the additional burden imposed by the government. Decreasing demand and the restrained state budget due to held-back EU funds have also played a role.
What factors are slowing down the construction of newly built apartments in Hungary? Rising interest rates, reduced support, and decreasing purchasing power are all factors that are slowing down the construction of newly built apartments in Hungary. The fall in demand and the impact of a restrained state budget due to held-back EU funds are also contributing to the slowdown.
What future prospects are there for the construction industry in Hungary? The future looks bleak for the construction industry in Hungary, as the number of building permits for new homes has significantly decreased. The industry is hoping for a turnaround with reductions in interest rates and state support programs such as the Family Home Creation Discount (CSOK Plus) and the Residential Building Modernisation Program.