Fundamental turn on the Hungarian property market: 10 pc price drop

Following last year’s dramatic price increase, Hungary’s property market prices are projected to normalise in 2023. Since demand has been falling for months, buyers can negotiate down the prices by almost 10 percent. Experts say if interest rates remain high or the government does not introduce new allocations, this trend will persist.

The reasons behind moderate demand are the high inflation and interest rates as well as the modification of Hungary’s utility price scheme. As a result, in end-2022, real estate agencies experienced a significant price surge. In a year-long period, the price hike reached 16 percent, but buyers waited until the last months to go through with the transactions.

Supply exceeds demand mostly in the case of huge, energetically not modernised properties in need of renovation. However, most sellers do not want to give away their real estate for a lower-than-expected price, so they wait for better days. As a result, the number of transactions dropped significantly compared to 2022.

Béla Tóth, an associate of the Debrecen-based DebOtthon real estate agency, said that he expects growth in transaction numbers. He believes that the trend will persist unless the government’s financial support policies change and interest rates in the property market will start to fall. In that regard, today’s central bank decision gave some reason for hope. Looking at different Hungarian municipalities, prices are particularly high in Debrecen; a square metre exceeds HUF 700,000 (EUR 1,852) on average. Debrecen is considered attractive because BMW and Catl will build new plants in the city, and Debrecen University counts thousands of foreign and Hungarian students. Tóth added that owners are supposed to sell their properties for 10 percent less, but only a few do.

Make the move if you have cash to invest

The owner of ArtHome in Szeged confirmed the previously mentioned trend, explaining that investors are gone and buyers and sellers are now in a ‘wait and watch’ mode. Prices normalised compared to the previous boom, but owners do not want to negotiate and keep the prices up.

In Mosonmagyaróvár, the trend is the same, and owners believe they will find a buyer sooner or later. They base their hope on the higher wages most locals earn working in Austria as well as on the growing demand for Austrian and Slovakian nationals. Nikoletta Szabó, leader of a local real estate agency office, predicts that buyers will return in the next few months.

The same goes for Sopron, a city also located near the Austrian-Hungarian border. Demand is high for energy-efficient small apartments and modernised panel houses. In Miskolc, buyers can negotiate the prices down by almost 10 percent. But the annual number of transactions may fall by 20-30 percent in 2023 compared to 2022.

To sum up, if you are considering purchasing property in the municipalities, you should probably make the move now.