Initial estimates suggest Hungary’s newly announced subsidised housing loan program, Otthon Start, could significantly inflate property prices—an alarming prospect for buyers. Those who delay may see their savings dwindle, and for some, the subsidy may eventually become meaningless. Here’s what experts say is the smartest strategy right now and where the biggest price hikes are expected.

Surging demand in Budapest and major cities

Prime Minister Viktor Orbán recently unveiled a brand-new state-backed loan program aimed at helping primarily young, first-time homebuyers. It has since emerged that the eligibility criteria are fairly broad, extending even to those who own up to half or less of a property. This has sparked a sharp increase in demand, according to key market players.

State news agency MTI reports that interest in studio apartments has soared in both the capital and county-level cities, based on 330,000 recent phone inquiries recorded by real estate site ingatlan.com. In Budapest, there’s also been a noticeable uptick in demand for properties between 40 and 80 square meters. Overall demand is up more than 60% across nearly all housing categories. In smaller towns, interest has expanded beyond apartments to include homes with gardens. Similar patterns have been observed by Duna House and zenga.hu, according to a G7 article.

The news outlet Index notes that Otthon Start may be disrupting the usual post-college-admissions trend of increased demand for rental housing near universities. This is particularly visible in Budapest, where the expected rental surge has not materialised, as many parents are now opting to buy instead of rent for their college-bound children.

Analysts see a grim outlook for Hungary’s housing market

Hungary’s real estate supply is so low—meaning few new homes are being built or entering the market—that prices were already poised to rise even without government intervention. According to the Hungarian National Bank, home prices between January and March increased by 15% nationally and 22% in Budapest alone. Otthon Start is expected to accelerate this trend.

The G7 report notes that previous housing subsidies—like the CSOK, Babaváró, and Green Home programs—also triggered major price hikes. Balázs Sándorfi, CEO and founder of Bankmonitor, says property prices in Budapest rose 10–27% within a year of similar announcements in the past.

Sándorfi projects that the new program could result in a 15–20% increase over the next year. Duna House’s chief analyst Péter Szegő estimates a 10–20% nominal price hike, while László Balogh forecasts an increase of 12–18%.

Balogh adds that the steepest increases are likely in lower-cost areas such as Miskolc and Kaposvár. In Budapest, newer developments are already priced out of the program’s HUF 1.5 million per square meter cap, meaning growth will likely occur in outer districts where interest is also intensifying.

In regional cities, panel and more affordable brick apartments may perform well, and suburban single-family homes could see significant appreciation due to Otthon Start.

In the long term, price hikes may cancel out state support

An analysis by GKI Economic Research Co. indicates that due to a shortage of new housing, the supply shock will lead to price spikes that could make homeownership unattainable for the very young buyers the program is aiming to help.

Multiple analyses suggest that acting quickly is key: the sooner one takes advantage of the subsidised loan, the better. Delay could mean that rising prices will erode any benefit from the government aid. In some cases, buyers might have been better off locking in a current market-rate loan—currently as low as 6.5%—even without Otthon Start.

The government acknowledges prices may rise

At a recent press briefing, Gergely Gulyás said the government does not expect price increases to exceed the amount provided in subsidies. But analysts argue that the only way to prevent runaway prices would be to boost supply through a robust housing construction program, thereby balancing the expected surge in demand.

Data shows that 15% fewer housing units were built in the first half of this year compared to the same period last year—a year that already had low numbers. On the other hand, G7’s analysis also highlights that the number of building permits issued in Budapest has quadrupled year-over-year.

Focus should shift to construction

Gábor Regős, chief economist at Gránit Fund Management, said Otthon Start should prioritise encouraging new housing development. Viktor Zsiday argues that Hungary’s ongoing supply deficit, fueled by low construction rates, is now being compounded by rising demand—an unsustainable formula for rapid price inflation. He also believes the program favors wealthy buyers while excluding the poor. Instead, Zsiday calls for higher housing density approvals, faster permitting, improved vocational training, and state-run rental housing development.

Former Hungarian National Bank Governor György Surányi echoed these concerns in an interview with HVG. He warned the program could lead to either tax hikes or inflation—or both. Like Zsiday, he emphasised the need for rental housing construction. Developers should be satisfied with a 6% annual return, and municipalities should be granted tenant-selection rights. Developers must be involved, Surányi added, since the national budget can’t afford to build this many homes alone.

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