Is the Hungarian real estate market on the brink of a revival?

MBH Bank’s Analysis Centre has recently published a comprehensive analysis of the Hungarian real estate market, encompassing various aspects of the domestic real estate landscape. This analysis sheds light on key trends, economic conditions and projections for the future.

Market trends and economic impact

According to Privátbankár, the study highlights a turning point in the housing market, prompted by shifts in economic conditions, the impact of inflation and tightening monetary policies in the second half of the previous year. This shift is manifested in a reduction in sales volume and a deceleration in house prices. The inflationary environment has led to a decrease in disposable household income, resulting in sustained low demand expected to persist throughout the year. Anticipated substantial improvements in the macroeconomic environment in the next year could pave the way for a turnaround in housing market trends by 2024.

Construction industry challenges

As previously highlighted, Hungary is witnessing an unstoppable decline in housing construction. Housing starts and issued building permits have continued to decline, with the first three quarters of of 2023 witnessing a 21% reduction in newly built dwellings compared to the previous year. The number of dwellings under construction also plummeted by 43%. Extended construction lead times foretell delays in home deliveries,, signalling a slower recovery in this segment of the construction industry.

Transaction projections

The third quarter of 2023 estimates over 22,000 real estate transactions, reflecting a 20% annual difference. The anticipated launch of CSOK Plus in 2024 could potentially generate an additional 10-20,000 housing transactions. However, prices are not expected to undergo significant changes.

Price stability and future market dynamics

Nominal stability in residential property prices in 2023 contrasts with a real decline of 18.5%, as reported by the MNB. Rent growth remained stable until the end of summer, with a 12% year-on-year increase in nominal terms. However, this growth did not keep pace with inflation. The current situation in the housing market may reverse in the upcoming year, driven by anticipated economic developments such as lower lending rates, improved consumer confidence, rising real wages and newly introduced subsidies.

Emerging real estate development

Amidst market challenges, the Waterside Residence, a new development on the Marina coast, is taking shape. The demand for new apartments near the Danube in Budapest remains high, especially those with a Danube panorama, Pénzcentrum reports. Developers continue to witness sustained interest in such projects, aligning with ongoing housing market trends.

Sustainable construction and special features

Newly built homes are showcasing improved energy efficiency, attributed to tightened legislation. The Waterside Residence project stands out for its AA+ rating, promising much lower overheads. Equipped with a unique hybrid system of geothermal pumps and heat pumps, the project aims for energy-efficient heating and cooling. Individual services, such as a gym, yoga room, sauna and playground, enhance the project’s appeal, with buyers receiving an interior design plan as an added benefit.

The Hungarian real estate market is navigating challenges, but with anticipated economic improvements and innovative developments, the landscape could see a positive shift in the coming year. For more insights into the Hungarian real estate market, explore our articles HERE.

Source: Privátbankár