The Hungarian Economy and Property Investment.

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budapest

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http://www.portfolio.hu/en/cikkek.tdp?cCheck=1&k=3&i=15558

It's an interesting turn of events. The Polish current account deficit is now increasing rapidly to a projected 6% of GDP this year, while the once notoriously high Hungarian deficit is now likely to be reduced to around 4%.

If you had suggested that this would be the case last year, very few foreign property investors would have believed you.
 
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Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

what actually does this mean to the hungarian economy and what would it mean long term for the investor of property in Hungary

Im asking this question as i'm only after investing in some property in budapest in the past while
 
Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

Fundamentally, it means that there are very strong signs that the Hungarian economy is getting back on its feet after spending several years in the doldrums and that the current austerity measures are bearing fruit. If GDP is increasing at the moment in difficult economic conditions, then when the measures end, it would seem that growth should return to strong levels.

The article would seem to indicate that the Polish economy is moving in the opposite direction, with a growing budget deficit.

To enter ERM2 and ultimately, the eurozone, each country would need to reduce its current account deficit to under 3%. At the moment, it would appear that Hungary is much more likely to achieve this aim.

The article also implies that Goldman Sachs believes that the HUF will strengthen, which is also good for Euro-based investors who have purchased here.
 
Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

budapest said:
The article also implies that Goldman Sachs believes that the HUF will strengthen, which is also good for Euro-based investors who have purchased here.
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That would depend on whether you are subsidising a forint mortgage with your euro income or not.

Or a swiss franc mortgage with your euro.

Or a forint mortgage with your forints.

Or a swiss franc mortgage with your forints.

Only in the last case do you benefit.

To my mind, the key part of the GS piece is the likelihood that the forint will remain high because interest rates will be kept high in Hungary.
 
Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

I was thinking more along the lines that if you purchased with EUR/EUR mortgage (which has been the typical approach for Irish investors), then sell at a later date when the HUF has strengthened against the EUR, then you make a profit before other profits or expenses are considered. It's good news in that the currency risk has paid off if this is the case.

Also, in relation to financing a mortgage for a property in Hungary, almost all foreign investors will benefit from a strengthened HUF as they will have taken out their mortgage in EUR, CHF or GBP at much more favourable exchange rates. (HUF mortgages don't really exist).
 
Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

Oh and by the way, that Hungarian current account gap is 4.95% in the article. I know rounding is a favourite of overseas investors, but rounding down to 4%?

If you want to look at it in terms of foreign, the banks are going to reduce the amount they will lend to Hungarians in foreign mortgages as they are still going to base these on HUF salaries. Therefore, there is not going to be organic demand within the local market (lower mortgage limits = lower prices). You are therefore relying on investor demand to provide a boost to prices. I wonder where those investors are going to come from?
 
Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

4.95% is the figure mentioned in the article, but close to 4% is the prediction of most analysts as well as the Hungarian Finance Ministry.

I'm not sure I understand the rationale that HU banks will lend less to Hungarians if they base what they will lend on HUF salaries. If the HUF continues to be strong, then the amount that Hungarians will have to pay back each month in CHF will be lower than in the past. I don't see how this would link into how much LTV they would be able to get in a CHF or EUR mortgage.
 
Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

Roll on the economic recovery ... it seems that "Budapest" is slowly swinging toward my way of thinking - Yes I know a long way to go .... ive always said that 2009 would be just the beginning, but from now up until EMU2 entry Hungary is the place to be invested in my view.

The economic cycle has reset and Hungary is set for second stage growth just as Czech Republic underwent over the last few years. It will be less dramatic due to the global economic environment, however I think that in the long run that will count in Hungarys favor - a longer sustained growth spurt would be just fine with me!

Hungary will lead the way out of recession as the world economy slumps Hungary will begin to look real good and thus will benefit from much needed inward investment.

This is all subject to the political decisions leading to economic growth.
 
Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

BudaRich said:
Roll on the economic recovery ... it seems that "Budapest" is slowly swinging toward my way of thinking - Yes I know a long way to go .... ive always said that 2009 would be just the beginning, but from now up until EMU2 entry Hungary is the place to be invested in my view.

The economic cycle has reset and Hungary is set for second stage growth just as Czech Republic underwent over the last few years. It will be less dramatic due to the global economic environment, however I think that in the long run that will count in Hungarys favor - a longer sustained growth spurt would be just fine with me!

Hungary will lead the way out of recession as the world economy slumps Hungary will begin to look real good and thus will benefit from much needed inward investment.

This is all subject to the political decisions leading to economic growth.
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What sweeping hyperbole!!!!, based a on some spurious economic data..
 
Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

From my point of view it would seem that the Hungarian market, at least from a retail point of view, is very sluggish.

We manufacture furniture in Romania and until 3 years ago Hungary would have been our second biggest customer after the UK. A bit before the riots in Budapest the whole thing came to a grinding halt.

Recently there have been signs of an improvement and our sales are rising again in Hungary, albeit slowly, but i'd be cautious yet about calling it a full-blown recovery and I certainly would not hype it up like Budarich does.

To me the fact that the hungarians are not buying furniture would, probably, point to a slow property market. After all when you purchase a new home then probably you afford yourself the luxury of a new sofa, bedroom suite or whatever. I'd say it's early days yet.

I'd also say, however, that Hungary is a fantastic country. Budapest is a gem. Debrecen is also very attractive and lets not forget the Balaton region which is a great place for a family holiday or a lads night out!

The biggest draw-back in hungary is the reservedness of its population, their refusal to speak any other language than hungarian, and (for me) their zenophobia when it comes to Romanians! The number of times I've been sworn at in Budapest for driving a romanian registered car is off the scale! Regardless of the fact that I thereafter showed them my Irish passport.

That said they are little better treated in Romania! When will the world learn??

If you can hack it in Hungary then your investment will most likely come right in time. If you bought in Budapest then you have definitely bought in a beautiful city which will progress steadily rather than at the light-speed pace of Budarich.
 
Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

Yes, the market is still very much at a standstill, but this is because of the austerity measures, which still have to run their course. It will be 2009 before taxes can be reduced and for the economic situation to improve. In the meantime, those who can afford to (of which there is a significant minority even at the moment) are competing for the best properties, which come to the market. In the case of almost every apartment I bid on for myself or on behalf of a client, I have to compete with counter bids (usually 100% cash offers!) from wealthier locals, who have the same criteria as we do. Today, I called up to bid on a property, which was advertised for sale yesterday afternoon and which I viewed at 10am this morning, but it had already been sold by the time I'd arrived home.

In relation to the point you make, Ancutza: In Hungary, a typical piece of furniture is kept for 25 years, when 6 years is the EU average. In this instance, I don't think it's the sluggish economy that's the problem, but more so the Hungarian trait of trying to get the best value out of everything!

In relation to the dislike of Romanians by certain Hungarians, (and I'm sure you're all too aware, Ancutza), it's based on the Transylvanian issue, when Hungary lost a huge chunk of its territory to Romania. It's primarily a nationalist issue rather than a xenophobic one and not too far away from the Northern Ireland situation.
 
Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

budapest said:
It's a nationalist issue rather than a xenophobic one
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Actually it's a combination of the two - and that's even worse.

A few weeks back, the Budapest Honvéd FC (footballclub from Kispest) direction told UEFA's Disciplinary Committee when they were questioned about the Gibor-Rune and Celtic Cross flags in the stadion and the Nazi salutes by the supporters: "It's just some folklore".

[broken link removed]

ps: They didn't get away with it, they have to play their next two home UEFA matches behind closed doors.
ps2: Budarich, Honvéd FC plays only a few hundred meters away from your apartment. So if you're full of anger because the economic recovery doesn't roll on like you predicted, you know where to go.
 
Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

UrbanDev said:
A few weeks back, the Budapest Honvéd FC (footballclub from Kispest) direction told UEFA's Disciplinary Committee when they were questioned about the Gibor-Rune and Celtic Cross flags in the stadion and the Nazi salutes by the supporters: "It's just some folklore".

[broken link removed]

AS a matter of interest whats the problem with the celtic cross? I mean, I understand the problem with the nazi salute and I have never heard of the Gibor-Rune but is the celtic cross of some fascist symbolism?
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Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

Madangan said:
AS a matter of interest whats the problem with the celtic cross? I mean, I understand the problem with the nazi salute and I have never heard of the Gibor-Rune but is the celtic cross of some fascist symbolism?
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I'm not a specialist in this matter, but this is what I found on Wikipedia.

Variations of the Celtic cross or the sun cross (sun wheel) from which it is derived, have been adopted by some white nationalist, neo-Nazi and neo-fascist groups. Their version of the Celtic cross is used by these groups to symbolize the Aryan race. They usually use a simplified geometric variation of the design with simple lines, without any of the ornamental complexity of traditional Celtic crosses (sometimes with the arms not extending outside the circle).
The use of insignia of organizations that have been banned in Germany (like the Nazi swastika or the arrow cross) may also be illegal in Austria, Hungary, Poland, Czech Republic, France, Brazil, Russia and other countries, depending on context.
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Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

I don't think this extreme behaviour of certain groups of football supporters is a good representation of the Hungarian mentality in general.

Back on topic, in relation to the HUF, it seems to have found a new band over the past couple of months, between 230-240 HUF to the Euro. It hasn't moved above 240 since June 19th.
 
Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

A bit of a run on the Forint now.
 
Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

A few weeks back, the Budapest Honvéd FC (footballclub from Kispest) direction told UEFA's Disciplinary Committee when they were questioned about the Gibor-Rune and Celtic Cross flags in the stadion and the Nazi salutes by the supporters: "It's just some folklore".
Click to expand...

Well they would say that wouldn't they... :)

Btw, does anyone remember the old Swastika laundry in Ballsbridge, that was still there in the late 80s?
 
Re: Forint now seen as better bet to Zloty (according to Goldman Sachs)

ubiquitous said:
Well they would say that wouldn't they... :)

Btw, does anyone remember the old Swastika laundry in Ballsbridge, that was still there in the late 80s?
Click to expand...
Milltown. Just by the Dodder bridge. Now apartments - what isn't :rolleyes:
 
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