15% of those working in the public sector would gladly take the annual 1 million forint housing support
The government is expected to launch a new housing program from January 1 to support those working in public service. Within its framework, employees in the state sector can receive an annual 1 million forint contribution for mortgage repayment or for paying the down payment of a new mortgage. For the time being, however, questions surround the support: the draft legislation has not yet been completed, and it is uncertain whether the government plans to set aside a targeted budgetary allocation for the support in the budget. The question therefore is whether this can be given as a cafeteria benefit, or a benefit to be granted upon application.
GKI carried out a representative 1,000-person survey among the population at the beginning of September. According to the results of the research, 15% of those working in the public sector would make use of the possibilities given by the support, if they had the opportunity. 17% are neutral on the question, while a further 68% do not plan to apply for the scheme.
Do you expect to take up the support in the next half year?
Source: GKI survey
If the central budget indeed allocates resources to the program, and the decision about the support will not be within the competence of the maintainers (municipalities, NEAK, KLIK etc.), then, assuming 595 thousand public service employees and a 15% uptake rate, nearly 90 thousand could enjoy the benefits provided by the support. The scheme can indeed be extremely favorable for those working in the public sector, however because of its (terminable at any time) cafeteria nature, the future is hard to plan with it in the case of new mortgages. It is therefore worth proceeding to take out a loan only if the monthly installment can be covered securely even without the support.
If the government actually assigns resources to the program, and the state sub-institutions can provide the benefit to all eligible persons, then fulfilling the support requests of the nearly 90 thousand public service employees (assuming a 1 million forint per person benefit) would mean an additional expenditure of 90 billion forints in 2026. The program’s budgetary impact may grow year by year because of the new applicants for the support.
The housing market consequences fundamentally depend on how those working in the public sector use the annual 1 million forint support. If the benefit is primarily used for the repayment of existing loans, then the program rather strengthens the financial stability of the affected households, while its effect on the real estate market remains neutral. In this case the scheme fills more of a liquidity-improving role.
However, if the support significantly stimulates new borrowing and thereby home purchases, then the expansion of demand may have a noticeable effect on real estate market processes. This, on the one hand, may contribute to the invigorating of housing turnover, on the other hand it may also generate moderate price increases.
Overall then the program’s effect is not clear: household usage patterns determine whether it rather plays more of a stabilizing, liquidity-enhancing role, or whether it makes a meaningful contribution to the increase in housing turnover.
