Double-digit increase can be expected in Hungary’s house prices

House prices in Hungary increased on average by 15.4 percent last year, and territorial differences might be behind this, states Portfolio.hu. Prices in Budapest have increased by 22.5 percent in a year, which greatly exceeds the increase in the countryside. Hungary’s housing market cycle has stepped into a more mature stage during 2016, as the increased needs ignited resolute take-off on the field of supply, as MNB’s most recent housing market report states.

The increase is continuing

The price increase experienced recently might slow down, so we cannot state that the market is exalted concerning the extension of new housing loans or the increase of national average house prices. Despite the decrease, the price increase might keep on being double-digit.

The low interest rate environment has a beneficial effect on investment demands because of the favorable loan costs. The increase of the house prices exceeded the rise of building costs, which has a positive effect on improvements. The wider supply is the reaction to the increased demand for new houses. The majority of the registered housing projects will be completed in 2018, so we might still expect a market of demands this year.

The difference in prices between the capital and the countryside is high in whole Europe, but in the case of Hungary, this rate is significantly high, so the increase in Budapest greatly exceeded the increase in the countryside. While prices have risen in Budapest by 22.5% last year, rural cities produced a 13.4%, settlements produced a 9.3% increase. The increase was also high in real terms, it reached a 13.4 percent national average, which is close to the nominal rise of 15.4 percent.