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Governmental housing plan also impacts furniture market

During the past decade, housing prices have climbed fast, while the growth in average salary lagged far behind. In 2011, after several years of price rises, this sparked a protest among young consumers for whom the dream of buying a house or apartment was slowly but surely getting farther away. With the minimal requirement of 25% of the apartment's price as a down payment, consumers would have to save for many years – and in the meanwhile the prices continue rising, resulting in many angry and discouraged consumers. The protest forced the government to take action in order to restrain the upward spiral and in 2015 the Buyer's Price plan was launched.

Buyer's Price requires contractors to allocate a certain percentage of apartment construction projects towards discounted housing. Consumers who do not own an apartment yet can then sign up for lotteries, in which they may win a discounted apartment in construction projects in various cities. During the past two years since the project was launched, several lotteries have been held and thousands of consumers won discounted apartments. However, these discounted apartments are only now being constructed; consumers who won an apartment in 2017 are only likely to move in to their new home in 2019 or 2020.


Although this has not yet affected regular housing prices significantly, Buyer's Price has succeeded in slowing the market down. In 2017, the number of apartment acquisitions dropped by 14% in comparison with 2016 – including Buyer's Price apartments, which in fact means that the drop in regular apartment acquisitions was steeper. The governmental plan succeeded in artificially decreasing demand for new apartments – by moving it elsewhere. The second hand market also suffers, as many consumers who would like to move into a larger apartment now have less potential buyers, as young consumers who would otherwise compromise and purchase small, more affordable second hand apartments now prefer to wait for Buyer's Price lotteries for new apartments.

This decrease has dire implications for the furniture market, as well as sanitaryware, flooring and other categories relating to renovations. Growth in furniture is closely correlated to growth in the housing market, as consumers tend to replace their furniture when moving into a new apartment. In addition, when moving into second-hand apartments consumers usually renovate as well – and the second-hand market slowdown therefore causes a slowdown in renovation materials too. In kitchens especially the governmental plan is wreaking havoc. In regular new apartments, consumers can upgrade their kitchen from the standard contractor's kitchen, usually turning to large kitchen companies for a customized kitchen. However, in the Buyer's Price plan consumers are not given that choice and they must make do with the standard kitchen provided by the contractor, which offers a far smaller margin for the kitchen manufacturers. Just two years into the plan, one large kitchen manufacturer has collapsed – Décor – and more players are at risk of closing down unless they prepare for the years ahead, in which many Buyer's Price apartments will be constructed at the expense of regular ones.


In 2018 and 2019 the furniture market is expected to continue declining, beginning to recover in 2020 – when the construction of many Buyer's Price apartment projects is completed and consumers can finally move into their new homes. Then they are likely to make the furniture purchases that they put off in the meantime.