Rental market paradox: Steep prices meet falling demand in Budapest

The Budapest rental market has started the year with high turnover but stagnating rental prices, according to the latest analysis by Rentingo. January saw a widening gap between supply and demand prices, with the average demand price at HUF 212,000 (EUR 525) and the supply price at HUF 248,000 (EUR 615), creating a 17% price gap.

Rental market dynamics

According to Rentingo, the rental market in Budapest is experiencing an unusual trend. Typically, the first months of the year see a surge in demand due to several factors. Many people decide to make life changes, such as moving or living together, around the end of the year, which is reflected in the market at the beginning of the new year. Additionally, January often brings pay raises, improving tenants’ financial situations and potentially increasing their willingness to seek new accommodations.

The market is also usually bolstered by an influx of domestic and international university students entering the rental market in late January and early February, just before the new semester begins. However, this year has seen a departure from the norm. The usual influx of foreign students, particularly those on Erasmus scholarships, has significantly decreased. This change has been noticeable since September 2024 and has had a substantial impact on the market.

Impact on landlords and tenants

Landlords are finding it challenging to increase rental prices, with the market showing clear signs of stagnation. While there are still many international students in Hungary, they are primarily here for full-degree programs supported by various domestic scholarships, such as the Diaspora Higher Education Scholarship Program and Stipendium Hungaricum.

The absence of short-term Erasmus students, who typically pushed average rental prices upward, has led to a shift in the market. Landlords who previously catered to this demographic are now targeting domestic tenants, effectively expanding the available rental stock in the capital.

Wider economic context

While the rental market stagnates, other areas of the housing sector show different trends. The ingatlan.com housing price index reports a more than 9% increase in housing prices nationwide compared to the previous year (read our report HERE).

The situation in Budapest reflects broader economic shifts, including changes in international education programmes and their impact on local economies. It also highlights the delicate balance between supply and demand in urban housing markets and how external factors can significantly influence market dynamics.

As the market adjusts to these new conditions, both landlords and tenants may need to reassess their strategies and expectations. For tenants, this could mean more negotiating power and a wider selection of available properties. For landlords, it may require a reevaluation of pricing strategies and target demographics to maintain occupancy rates in a changing market landscape.

Read also:

• From Buda to Debrecen: Hungarian property market sees rapid surge in 2025
• Hungary’s housing market skyrockets in 2025: Why are investors turning to Hungarian real estate?

Featured image: depositphotos.com