Hungarian real estate industry meets turning point: is there a way out?

The Hungarian construction industry is currently grappling with a major issue: insufficient demand for new homes. The data indicates that fewer people are interested in purchasing new homes, leading to a decline in investment and an increase in completed but unsold properties.

One notable trend is the rising number of completed homes that have yet to find buyers. This indicates a mismatch between supply and demand, with more properties being built without having an owner lined up. Although there have been some price reductions, they are impacting fewer homes, writes Pénzcentrum.

Lack of demand

Insufficient demand is the primary obstacle affecting domestic production, as indicated by the Hungarian central bank’s (MNB) Housing Market Indicator. The last time the situation was this bad was in 2020, during the economic difficulties caused by the COVID-19 pandemic.

Although there are signs of improvement in the availability of raw materials, it may be due to fewer construction orders rather than an oversupply. The indicator for financial constraints has started to decline since February, but this may not necessarily mean that people have more money. Instead, it suggests that only those with sufficient financial means are initiating building projects.

Less construction and empty houses

The backlog of construction orders and the share of new orders have both shown a declining trend. Construction costs and house prices have also begun to slow down, although this does not imply a decrease in real estate prices.

Financial institutions are allocating less money to the building of new homes. In September 2022, customers were borrowing over HUF 10 billion per month for new home construction. However, by February 2023, this amount had fallen to under HUF 4 billion.

The MNB’s survey examined the statistics for new housing projects in Budapest, revealing a growing number of completed but vacant apartments in the capital. The countryside has experienced a similar trend, with a rising number of vacant apartments and unsold properties under construction.

Conclusion

In conclusion, the Hungarian construction industry is facing the challenge of insufficient demand for new homes. This has led to an increase in completed but unsold properties and a decline in orders. The labour shortage in the industry has improved, but financial constraints remain a concern.

While some improvements have been observed in the availability of raw materials, it may be due to reduced demand rather than increased supply. The market for new homes has become more balanced, with a decreasing percentage of repriced properties having increased prices. However, the overall repricing rate remains low, and the construction industry continues to face significant challenges in the Hungarian housing market.

Source: Pénzcentrum

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1 Comment

What's the Incentive ? says:

13/06/2023 at 19:35

What’s the incentive to purchase property in Budapest, Hungary ?
Carnage builds inside the Property – Construction “scene” in Hungary, that the oversupply of property’s is BLATANT – been the case in particular and GROWN – post February 2020, the arrival of the Novel Pandemic. the factual position, that Sellers outstripped buyers HUMONGOUSLY.
Foreign Investment into Property and Construction under the “ailing” Orban Government, has dried up.
The Hungarian Economy, no signs of stability in the Hungarian economy, no capital growth, that EXPERTS are growing in number believing that Hungary has entered an Insolvent position – Financially and Economically.
Orban continues to “Move” Hungary away from DEMOCRACY – aligning Hungary deeper with Russia and China – that is deepening cascading the name of Hungary in the eyes of country’s that are Governed under DEMOCRACY – into a deepening BLACK pit, likened to an abyss – that has no return.
The fragility of Hungary – in all componentry – SCARY.