Contradictory numbers: What’s happening with property prices in Hungary?

The Hungarian central bank’s (MNB) latest house price index for the second quarter of 2023 has been published. It shows that the annual growth rate of property prices has slowed down significantly in Budapest and in rural cities.

However, the picture is very different when we look at the figures in real terms. In that case, the report shows that prices have fallen in all categories. Adjusted for inflation, prices in Budapest have fallen by 14% in a year, and by 25% in the municipalities.

Moderate rise in property prices when looking at nominal values

In the capital, property prices rose at a moderating quarterly pace of 1.1% in the second quarter of 2023, following a 2.7% increase in the previous quarter, Portfolio writes based on MNB’s index. Nominal annual property price dynamics have thus slowed to 4.9%.

In rural cities, house prices fell by 1% in the second quarter, following a 4.3% increase in the previous quarter. Thus, on an annual basis, the annual property price dynamics slowed from 9.5 to 1.1%.

On a quarter-on-quarter basis, property prices in the first quarter of 2023 were still growing at a rate of between 3 and 6% everywhere except in the Central Hungarian region. In the second quarter, however, house prices fell by 3.1% in the Northern Great Plain region, 2.9% in the Southern Great Plain region and 1.5% in the Western Transdanubian region. Meanwhile, in the other regions house prices continued to rise.

Huge price decreases in real terms

In real terms, i.e. relative to inflation, the picture is very different, Portfolio notes. Property prices have fallen by 18.5% year-on-year. The smallest decrease was 14-14% in Budapest and the Western Transdanubian region, while the largest was 25% in the municipalities.

Read more of our articles on the Hungarian real estate market:

• Shocking price gap between most and least expensive streets in Hungary
• How do Budapest rental prices fare compared to other European cities’?
• Brutal price fall expected on Hungarian property market in next 2-3 years