Gloomy trends: Property in Hungary became more expensive than anybody ever thought

Young people are increasingly being excluded from the property market as access to credit becomes tighter, according to data from the Hungarian Central Statistical Office (HSCO). As a result, they are being forced to enter the rental market rather than the sales market, which is driving up rents. For this reason, we made a snapshot of the rental market in Hungary and its neighbouring countries.

The HSCO’s data show that the young individuals’ (population under 36) share of total purchases was stagnating at 30% for years, but it has dropped by 27-28% in the last 2-1.5 years. This is due to the difficulty in obtaining home loans and the fact that this is the age group whose home purchase is most dependent on the availability and affordability of credit.

The entry of young people into the housing market is also becoming a persisting trend. Starting a family and completing university studies have also been increasingly postponed in recent decades, so when we talk about young people, we usually focus on those under 36 years of age on the housing market – Gáborné Székely, Head of the Department of HSCO told InfoRadio.

The housing market from the perspective of the young population

In large cities, the share of young people aged under 36 in the housing market is generally less than a quarter of all housing purchases, but in smaller municipalities, it is already around 29-30%, while in villages, it is even higher, at 34% in 2022.

The share of young people in the housing market was sitting at around 30% for years, but has stop to 27-28% in the last 1.5-2 years. The HSCO’s expert cited difficulties in the credit market as the main reason. “This is the age group for whom the purchase of a home depends most on the availability and affordability of credit,” elaborated Gáborné Székely on the issue.

In Budapest’s popular inner-city districts, the average monthly rent is HUF 147,000 (EUR) 390) , but for that price, just a small (30 sqm) studio is typically available. While for two-room apartments property-owners are asking EUR 580 or even more. In popular countryside university centres like Debrecen and Szeged, the same price for rent is between EUR 380-390 respectively.

A study has also been published on young people’s access to housing. Professional organisations are calling for an affordable rental housing programme to alleviate the housing crisis, according to Index. As it is understood, a governmental initiative is already in the making.

Regional outlook

While in the Austrian capital with an average salary, one can buy its own home in less than 10 years, in Hungary you have to work an average of almost 17 years, according to the data of the Hungarian National Bank (MNB), which was included in its latest Housing Market Report. Moreover, Hungary also stands out among European countries when it comes to home loans, which have increased by almost 10% in recent years.

According to the analysis of Otthon Centrum, surprisingly, rents in Vienna – traditionally the most expensive of the Central European region’s capitals – have fallen compared to last year. For two-bedroom apartments in the city centre, this is only a minimal drop of around 3%. Further away from downtown, rents are already over 20-25% lower than last year. The average monthly rent in the city centre is EUR 880, while in the outer districts, a small one-bedroom apartment costs EUR 656.

Vienna

The V4 capitals ahead of Budapest

This summer, Prague became the most expensive city in the region when it comes to rental prices. A two-bedroom flat in the centre of the Czech capital costs an average of 18,000 Czech koruns (EUR 980) per month. Even further from downtown, the average monthly rent is 750 EUR. This means that prices have risen by 18-20% within a year. In the Polish capital, on the other hand, rents have risen somewhat more, by 20-25%. The rent for a two-bedroom flat in the city centre in Warsaw is EUR 820 per month, while landlords further away from the city centre charge EUR  650 per month.

Prices are similar to Warsaw in Bratislava, which only saw a minor increase in rents. In the Slovak capital, the monthly rent for a one-bedroom flat in the city centre is EUR 650 (without utilities), while residents in the outskirts of the city have to fork out EUR 505, utility fees also not included.

If we take a look at Ljubljana and Zagreb, prices for rental flats have soared by 8 to 12% within a year, according to numbeo.com. In the Slovenian capital, flats in the city centre are available for more or less EUR 600, while prices in the outskirts are more affordable, sitting at only EUR 470 on average. As of this year, prices for rental flats in Zagreb are defined in euros, and they are practically the same as in Ljubljana.