Hungarian construction industry in serious trouble: what does the future hold?

This year has been rough on the construction industry, and the prospects are not looking good. This October, the industry actually experienced a slight increase, so what could be wrong?

What happened?

At first glance, things might not seem so bleak, since October was only the second time this year when production did not decrease. However, that’s not as good of a news as you’d first believe. According to an article written by G7, October brought an increase in production compared to last year, even if it was minimal. It was still something quite unheard of in a while. In the past one and a half year, this was only the fourth month to bring an expansion to the table.

The first ten months of 2023 dropped production by a stunning 4,2 percent all together. To put into numbers, the all-encompassing production was roughly HUF 660 billion (EUR 1,7 billion). Out of this around HUF 400 billion (or a little more than EUR 1 billion) went into construction of buildings and the leftover amount of HUF 260 billion (around EUR 680 million) was used for constructions other than buildings. This amount has actually decreased in the past time period.

Concerning projections

In value, the sector’s order backlog makes up for HUF 2200 billion (EUR 5,7 billion). This means a drastic drop in quantity: drastic meaning more than 30 percent contrasted with the numbers of the same month of last year. The actual statistics are not that shocking, but the truly very concerning part of it are the projections based on them. Compared to the past two years, the current value is the lowest in memory. Especially once the drastic price hikes are taken into account, which drove up the market by a shocking 40 percent.

The consequences

The construction industry’s struggles have started to spread down to the suppliers and manufacturers. The prices are being felt by everybody, and are perfectly represented by the Icarus fall of buildings, which have dropped from their historical high of 27 percent to a spectacular low of 7 and a half percent.