Seize the Opportunity: Construction and Home Renovation in Hungary
Construction Materials Market Faces Steep Decline in Hungary
The construction materials market in Hungary is experiencing a sharp decline, with sales dropping by a third both in terms of value and volume in May. This alarming trend is worsening month by month, signaling a worrisome situation for the industry. Renovations are on the decline, and there are fewer new construction projects being initiated. However, amidst these challenges, the falling prices in the construction market present an opportune time for individuals to start building or renovating their homes.
Building materials traders have reported a significant decrease in turnover in the first five months of this year. Compared to the previous year, the market has declined by 24 percent. Distributors are particularly affected, experiencing a 32 percent decrease in sales and a 35 percent decrease in turnover in May alone. This growing backlog compared to the previous year is causing alarm, and there are no signs of the trend reversing as of yet.
Attila Juhász, President of Új Ház Építőanyag Nagykereskedelmi Plc., expressed concerns about the development of the building materials market this year. Despite the availability of home-building subsidies, the population is hesitant to undertake new constructions due to increased credit costs. The decline in orders is particularly evident in new single-family housing, with a staggering 40 percent decrease.
Data from New House (Új Ház) reveals that turnover in the construction materials market declined by 22 percent in the first four months of the year, with a further decrease of 24 percent in May. This indicates an accelerating pace of decline. In May alone, the year-on-year decline in value reached 32 percent, while volume sales dropped by 35 percent.
Although there have been some price reductions in certain product areas, construction material prices are experiencing stagnation overall. Attila Juhász warns that there are no prospects for significant price reductions in the medium to long term. The market, which had experienced overheating due to home renovation subsidies last year, is now facing a more widespread downturn than anticipated.
If the order books remain low for an extended period, there is a risk of contractors migrating abroad, undermining the perceived benefits of the current situation for customers. While it is currently easier to find a contractor with average lead times halved, the lack of major investments and a sustained decline in renovation and construction projects may lead to challenges in reviving the sector. This could even result in the closure of building materials factories.
The construction materials market’s decline is already impacting the revenues of Hungarian building materials retailers, particularly in the residential market. The number of detached houses under construction has gradually decreased by half compared to the previous year. Stimulating renovation and construction is crucial to avoid further challenges and expenses in the sector.
Without intervention, the construction materials market in Hungary is predicted to further decline, posing serious challenges for the construction industry and the entire supply chain. It is imperative to take measures to boost the market and prevent long-term setbacks.
