What does Family Home Discount bring to public finances?

According to the latest forecast of the ABC, approximately 7,600 new homes will be handed over in Hungary in 2015, and 12,500 this year, and 18,700 in 2017 thanks to the Family Home Discount.

Increased tax revenues


As the central bank estimates that 10 million Family Home Discounts could be absorbed by up to three quarters of new homes, which could cost 110-115 billion this year and 150-160 billion next year on the expenditure side, which could be seriously dampened by increased tax revenues. According to the ABC’s estimate, the GDP level can be raised by 0.3-0.4% by the end of 2016 and by 0.6-0.7% by the end of 2017, due to the expected recovery of housing construction.

The expected impact of the new Family Home Creation Discount is described in more detail in the ABC’s Inflation Report released today:

  • The discrepancy between the number of dwellings handed over and the number of building permits issued indicates that real estate developers have recently chosen to wait. New builds will be preceded by a rise in the number of housing permits around 4-8 quarters as a rising trend unfolds.
  • The ABC expects the deferred investments to be realized soon after the introduction of the new Family Home Discount. So this year, another 5,000 new homes will be built, and in 2017, following the upturn in the program, another 5,000 new homes will be built.
  • All in all, the central bank expects the number of newly built homes to double within two years as a result of the program. In addition, the measures will also increase employment levels in line with the accelerated housing market investment.

Due to the progressive increase in support


The central bank estimates that around three-quarters of the approximately 13,000 new homes to be built in 2016 will benefit from a $ 10 million subsidy for 3 children. The number of exercise after 1 and 2 children is expected to be significantly lower than that of 3 children due to the progressive increase in support. Ratios for 2017 are similar.

For the budget, this year’s subsidy will amount to HUF 3 billion, and next year it will be HUF 5 billion, assuming that half of the users also take interest-subsidized loans for the HUF 10 million subsidy. But it is important to mention that the overall impact on the budget balance may be significantly lower than the above given the economic stimulus effect of housing construction.

The ABC estimates that by the end of 2016, the expected recovery in housing construction will raise the level of GDP by 0.3-0.4%, and by the end of 2017 by 0.6-0.7%.

Positive effects of the program:

  • increasing personal income and contribution income due to the increase in the number of employees
  • increase in VAT revenue due to additional construction
  • the growth of other tax types is expected to be smaller

Based on the above, the tax revenue surplus due to economic stimulus effects will be HUF 20-25 billion in 2015 and HUF 40-45 billion in 2017.

Significant subsidies for new homes and VAT reductions


Professionals are not expecting a higher demand despite the expansion of the program, as they expect significant subsidies for new homes and VAT reductions to absorb demand from the used housing market. This year and next, the ABC expects about HUF 10 billion, which is double the amount of HUF 4.7 billion spent on Family Home Discount second-hand housing introduced on July 1, 2015.

If you are thinking of buying a home and find it difficult to get help in the lawful jungle, seek help from your Polonius credit broker! Our staff will find the construction that best fits your purpose, be it Family Home Discount 10 + 10, supported home loan.