Minister talks about the Hungarian economy’s future: 3-4% GDP growth, SME program, strict rules for Airbnb, rentals

Government measures in the coming years will be determined by the three pillars of the government’s new economic policy, National Economy Minister Márton Nagy said at the Portfolio Budapest Economic Forum 2024 conference on Thursday.

25k new homes per year

Nagy noted that the three pillars of the new policy, approved at a cabinet meeting earlier in the week, were ensuring affordable housing, boosting the purchasing power of working Hungarians, and supporting SMEs with the launch of the Demján Sándor programme.

Nagy said Hungary’s third-quarter GDP would underperform the market consensus, coming in around zero, and put full-year growth under 1.5pc. He added that growth could climb over 3pc in Q1 2025, then move in a 3-4pc range.

Nagy said construction of “at least 25,000” homes a year was a “realistic goal”, as were “affordable” home prices and rental rates. He stressed that home mortgage rates had to be brought under 5pc, adding that there was nothing to stop runaway “home inflation”.

He said the capital was in the midst of a “housing crisis” in which young people had to pay over 50pc or 60pc of their income for rent. He added that the government had to intervene because local councils had not resolved the issue.

Tax increase on Airbnb-type activity

He noted that regulation of short-term rentals had been in the hands of the metropolitan council and district councils, but no measures had been taken.

Nagy said the government planned to announce a two-year moratorium on licences for short-term rentals in the capital, while raising the tax on Airbnb-type activity by a factor of “four or five”.

The government also wants to ensure there are enough dormitory rooms, even though that should be the task of universities, he added.

He said raising the minimum wage to a monthly EUR 1,000 and the average wage to HUF 1 million by 2028 was achievable if wage increases could be based on economic growth.

Nagy said the details of a credit scheme for young blue-collar workers were being drafted. He added that the interest-free credit would be capped at HUF 4m.

He said the Demjan Sandor Programme aimed to double the revenue or balance sheets of SMEs. He added that an important goal was doubling the share of Hungarian-owned SMEs in exports, while upgrading their digital accessibility and easing their access to credit.

Orbán cabinet drafting 2025 budget with ‘improved outlooks’

The government is drafting the 2025 budget with “improved outlooks”, Finance Minister Mihály Varga said at the Portfolio Budapest Economic Forum 2024 conference on Thursday. Varga said the government assumed GDP growth of 3.4pc, a 4.3pc increase in consumption and 5-5.5pc higher investment volume in 2025. He added that there were no plans to introduce new taxes, noting that announcements had already been made on phasing out windfall profit taxes on airlines, pharmaceutical companies and telcos. The government calculates with gross wage growth of 8.6pc next year, while it sees retail sales climbing 4-4.5pc.