The European Commission has proposed new rules aimed at tackling Europe’s housing crisis, giving cities a clearer framework for restricting short-term rentals and investment-driven property use. However, the proposal would not introduce an automatic Airbnb ban. Decisions on restrictions would remain with national governments and local authorities, under strict conditions.
Hungary could be particularly affected in Budapest, as well as in several major university cities, according to an analysis by property website ingatlan.com.
Restrictions would require proof of a housing crisis
The European Commission presented its proposed regulation on affordable housing in early September. The package aims both to give cities struggling with housing affordability more room to act and to encourage the construction of more homes.
Under the proposal, restrictions could only be introduced in specifically identified areas experiencing what would be defined as “housing stress”.
Three conditions would have to be demonstrated at the same time:
- the ratio of property prices to incomes is persistently high, with an average home costing at least the equivalent of eight years of average net income;
- the situation has deteriorated, with this ratio having increased over the previous ten years; and
- housing pressure is not expected to ease over the following three years.
Any restrictions could remain in place for a maximum of five years and would have to be reviewed regularly.
Budapest could be among the areas affected
Based on current official income data and asking prices per square metre, the price of a 60-square-metre flat in Budapest is roughly equivalent to 11–13 years of net income, according to ingatlan.com. The ratio is lower nationwide, while homes in county capitals correspond to around eight to nine years of average earnings.
However, the exact areas covered by any future rules cannot yet be determined. Balogh László, chief economic expert at ingatlan.com, noted that much would depend on the EU methodology and the income levels used for the calculations.
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Budapest has already tightened short-term rental rules
Several central Budapest districts have already introduced or considered restrictions on short-term rentals.
In Terézváros (District VI), short-term accommodation has been banned since January. In Józsefváros (District VIII), the number of flats available for short-term rental will be capped at 3.5% of the district’s housing stock from next year, while District I has also been considering tighter regulation.
Data from ingatlan.com suggest that the measures in Terézváros have already had a noticeable effect on the local rental market. Following the introduction of the restrictions, the supply of flats available for long-term rent in the district increased by 34%, while interest in such properties rose by 32%. At the same time, the average monthly rent fell from HUF 300,000 to HUF 280,000.
The figures suggest that restrictions can significantly reshape the local rental market, although they do not solve the wider shortage of housing on their own.
“One of the most important changes could be that EU regulation would create a clearer legal framework for cities seeking to ease housing pressures by restricting short-term rentals or investment-driven property purchases,” Balogh László said.
He added that restrictions alone could not solve the shortage of homes, with more new housing, faster development and greater supply needed to address the wider problem.
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Brussels also wants more homes to be built
The EU package therefore places considerable emphasis on increasing housing supply alongside possible restrictions.
The European Commission would encourage faster planning and permitting procedures, brownfield development, the construction of rental housing and student accommodation, the creation of land banks and the use of vacant homes.
There may also be significant untapped potential in Hungary. According to the 2022 census, nearly 572,000 residential properties were classified as unoccupied nationwide, including more than 160,000 in Budapest.
However, ingatlan.com points out that these properties are not necessarily all sitting empty. Some are being used for other purposes, while others are not suitable for habitation or require major renovation. A proportion could nevertheless potentially return to the housing market following investment and refurbishment.
EU funding could support housing programmes
The proposal also has a significant financial component. It envisages mobilising tens of billions of euros through EU and European Investment Bank funding for affordable housing initiatives.
According to ingatlan.com, this could also support some of the housing policy objectives already being pursued in Hungary.
Balogh László said that, from the perspective of the Hungarian housing market, increasing the supply of affordable new homes could prove more significant in the long term than individual restrictions.
Hungary continues to face a shortage of newly built affordable homes, while demand remains strong in well-connected urban areas. A sustained increase in new construction could also help renew the country’s housing stock and improve its energy efficiency.
The proposal is not yet final
The European Commission’s proposal is still at an early stage. It must be approved by both the European Parliament and the Council of the European Union, and the legislative process could take 18 months to two years, according to ingatlan.com. If adopted, the regulation would apply directly in Hungary as well.
