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Home renovation subsidies could affect prices, credit demand

Residential

Photo by ESB Professional/Shutterstock.com

Government subsidies available for home renovation from next year could impact prices and raise demand for consumer credit, the National Bank of Hungary (MNB) said in a report, according to Hungarian news agency MTI.

From January 1, the government is offering to cover half of home renovation costs, up to HUF 3 millio, for families with one or more children.

"As a result of the renovation subsidy, a strong increase is expected in demand for skilled construction work as well as for basic materials and consumer durables that can be used or installed during renovation, which – in conjunction with a narrowing of construction capacities – will affect the cost and scheduling of home building as well as the prices of the goods concerned," the NBH said in its latest quarterly Inflation Report.

The central bank noted that applicants for the subsidies must have the total amount for renovation available in advance, "which may result in a rise in demand for consumer loans".

Minister for Families Katalin Novák has said the home renovation subsidies could cost the state HUF 150 bln-170 bln.

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