Hungary’s Housing Market Heats Up in 2025: Insights and Outlook.

Hungary’s Housing Market Heats Up in 2025: Insights and Outlook

1. Market Snapshot: Property Prices on the Rise

The housing market in Hungary is showing dynamic momentum:

• Q1 2025: The MNB House Price Index reports a 15.34% year-on-year increase in nominal terms, with real (inflation-adjusted) growth of 9.57%. Quarter-on-quarter, prices rose 7.04% nominally (4.36% real growth).

• Regional Highlights:

  • Budapest leads the charge with a staggering 22.30% nominal (16.19% real) year-on-year increase.

  • Southern Transdanubia and Northern Hungary follow with strong growth of 16.84% and 15.91%, respectively.

  • In contrast, the Pest region recorded more modest growth at 7.82%.

• Pricing Benchmarks: As of Q1 2025, average prices per square meter for second-hand homes were ~HUF 1,162,000 (~USD 3,019) in Budapest and ranged between HUF 283,000–553,000 (~USD 735–1,437) in other major regions.

2. A Look Back: Hungary’s Housing Cycles

• Post-1989 Transition: Privatization, mortgage system establishment, and EU accession reshaped Hungary’s housing landscape.

• 2008–2013 Crisis: A 21% drop in nominal prices (35% deflated), with new constructions plummeting. By 2013, only 7,293 new units were completed.

• Recovery Era (2014 Onward): Conversion of foreign-currency loans to forints and the introduction of the CSOK subsidy program sparked a revival. Housing construction soared (~30% YoY growth), and prices surged over 240% nominally (160% real) by 2022.

However, 2022–2023 brought headwinds—higher material costs and inflation slowed growth to 12.3% (nominal) in 2022 and 10.0% in 2023. Recovery resumed in 2024, buoyed by housing support measures and the Housing Capital Program introduced late in the year.

3. Demand & Transactions: A Strong Year Ahead

• 2024: Residential transactions jumped by 20.6%, with second-hand sales up 22.3% and new home sales down 4.7%.

• By Region: Budapest accounted for 26% of all deals and saw the largest surge—33.5% YoY increase in sales.

• Early 2025 Milestones: Duna House estimates 63,390 transactions in H1 2025 (+2.8% YoY).

• Full-Year Outlook: OTP projects 155,000 transactions for 2025 (slightly above 10-year average), while MBH Bank forecasts a modest increase over 2024 levels.

4. Supply Constraints Begin to Shift

• Completed Dwellings: Only 5,129 units were completed in H1 2025—a 14.9% decrease YoY, with 36% taking place in Budapest.

• Permits Issued: A significant rebound—12,830 new dwelling permits, up 43% YoY. Budapest alone accounted for nearly 6,000 approvals, a 3.8-fold increase. Districts XI, XIII, X, and XXI accounted for 80% of these permits.

• Government Support: The HUF 200 billion Housing Capital Program is expected to generate HUF 800–1,000 billion in housing investments, setting the stage for a construction surge in 2026–2027.

5. Mortgage Market: Rate Caps and Subsidies

• Monetary Policy: ECB rate cuts in early 2025 didn’t prompt corresponding easing by the MNB, which held the base rate at 6.50% since September 2024.

• Mortgage Rates (June 2025):

  • New loans: 6.94% (slightly up from June 2024).

  • Outstanding loans: 6.12%, up 0.33 percentage points YoY.

• Loan Approvals (2024): Mortgage volume jumped by 46.4%, value soared by 121.5%, with subsidized loans rising to 25.2% of new approvals.

• New Program (Coming Sept 2025): "Otthon Start" – fixed-rate (3%) loans up to HUF 50 million (~USD 135,000) for first-time buyers; eligibility thresholds are HUF 100 million for apartments and HUF 150 million for houses.

6. Rentals & Yields: Midtown Stabilization

• Rental Inflation (H1 2025): Nationwide nominal rent growth slowed to 7.3%, and to 6.7% in Budapest. Real increases were modest at 2.6% and 2.0%, respectively.

• Regional Rental Performance: Highest nominal growth in Northern Hungary (11.3%), followed by Pest (9.5%) and Southern Great Plain (8.4%).

• Average Monthly Rents: Budapest ~HUF 264,000 (~USD 713); Pest slightly higher at HUF 274,000 (~USD 740); much lower in Northern Hungary (~HUF 137,000 / USD 371).

• Rental Yields (July 2025): Gross yields averaged 5.09%, slightly down from January (5.11%) and March 2024 (5.78%). Highest yields in Debrecen (5.47%) and Budapest (5.03%).

• Short-Term Rentals (STR) Regulation: To tackle supply issues, a two-year freeze on new Airbnb licenses in Budapest starts in 2025, and District VI will impose a full ban on STRs starting January 2026. Expected to shift inventory to longer-term rentals and ease pressures on rental pricing.

7. Economic Backdrop: Mixed Signals Ahead

• Growth & Inflation:

  • GDP: Rebounded 0.5% in 2024 but contracted 0.2% QoQ in Q1 2025.

  • EC projects modest annual growth of 0.8% in 2025, rising to 2.5% in 2026.

  • Inflation eased from 17.1% in 2023 to 3.7% in 2024; rose again to 4.6% in June 2025.

• Labor Market: Unemployment increased modestly to 4.3% by June 2025; wages grew approx. 7.7% YoY to HUF 483,000 (~USD 1,350).

• External Risks: IMF flags stagnation, high inflation, and non-traditional policy tools as vulnerabilities. Fitch affirmed a 'BBB' rating with stable outlook, noting structural strengths and governance concerns.

Summary: What’s Next for Hungary’s Housing Market?

1. Prices keep climbing—especially in Budapest and Transdanubia—with inflation-adjusted growth signaling robust real gains.

2. Demand is resurging, though new home supply lags, despite a permit-led rebound.

3. Lending remains tight, though supportive programs like Otthon Start ease entry for buyers.

4. Rentals see cooling growth and policy-driven shifts that may boost long-term availability.

5. Macro outlook is mixed, with fragile growth, persistent inflation, and policy uncertainties creating a cautiously optimistic backdrop.