Hungary offers nearly $10,000 for home renovations in latest housing measure

Hungary's government will give up to 3 million forints ($9,693) to families to help them renovate their homes from next year, the latest measure to boost economic recovery from the coronavirus pandemic.

Hungary's government will give up to 3 million forints ($9,693) to families to help them renovate their homes from next year, the latest measure to boost economic recovery from the coronavirus pandemic. The health crisis and a slower-than-expected recovery could represent the biggest threat to Prime Minister Viktor Orban's decade-long rule as he prepares to face parliamentary elections in the first half of 2022.

The announcement comes a week after Orban said Hungary will reintroduce a lower value-added tax rate of 5% on housing projects until the end of 2022 to shore up the construction sector. "Families with at least one child will be able to reclaim half of their renovation costs, up to 3 million forints," Katalin Novak, Minister for Families said in a video message.

Hungary, whose standard 27% VAT rate is the highest in the European Union, applied a 5% rate on housing projects from 2016 until the end of last year. The measure fuelled a housing boom in Budapest that helped boost Hungary's economic growth rate to around 4% to 5%.

Peter Virovacz, an economist at ING, said next year's budget deficit could come in at around 4% of gross domestic product, above the government's 2.9% target in the 2021 budget. "This fits into the government's policy of supporting families and home construction. However, such steps alone cannot reverse the economic shock caused by the coronavirus pandemic," he added.

The economy shrank by an annual 13.6% in the second quarter due to Central Europe's strictest lockdown and could contract by 5% to 7% for full-year 2020. ($1 = 309.5 forints)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)