Is there a prospect that the Hungarian real estate market prices will drop in the next 12 months by spring 2024? The following economic trends will determine the fate of the market.
What could the Hungarian housing market look like in the next 12 months? Portfolio presented this question to several real estate experts in their Housing Market Attitude survey to map the potential scenarios.
As we have previously written, the Hungarian real estate market is currently stagnating. The prices have reached their peak and demand cannot follow further increases. Due to the high inflation and interest rates, potential buyers won’t apply for loans, therefore, they must turn their attention to the rental market.
But what will the real estate market look like in 12 months regarding new home purchases? The fact that the price growth fell below the expectation of the analysts is surprising, but a real turnaround might not be a viable scenario in the following months.
Grim outlooks on the real estate market
On average, the 9 experts surveyed by Portfolio expect a slight, gradual decline in prices until mid-summer, followed by a painfully slow rise until April next year. It is likely that the stagnation will end, and prices will start to rise again when interest rates are low enough for people to seriously consider taking loans again, thus increasing market demand.
On the rental market, prices will more closely keep track of inflation. As we have reported earlier, with the end of the utility crisis scare and the growth of wages, the prices on the rental market in Hungary started to increase again. The experts calculate that by April 2024, rental prices could steadily increase by 8-9 percent.
Market specialists are currently advising against purchasing newly built homes. Alongside the large interest rates on loans, construction firms are installing higher quality, more expensive materials to achieve improved energy efficiency in case of another utility crisis. As a result, a 7-8 percent price increase is expected by April 2024, especially in Budapest.
As to what factors and economic trends could have the greatest impact on the real estate market, the experts agreed on common themes.
First, to increase demand interest rates must be lower, and the government ought to find ways to combat the record-high inflation, which is still higher in Hungary than in Western-European countries. They also mentioned the impact of the Russo-Ukrainian war on the price of construction materials and the frozen EU funds which are being withheld due to the rule of law mechanism. Finding solutions to these issues may stimulate new investments in the Hungarian housing market.
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