Hungary Residential Real Estate Market Analysis 2022

Lalaine C. Delmendo | November 30, 2022

Hungary’s house price increases are accelerating again. Hungary’s nationwide house price index soared 22.8% (11% inflation-adjusted) during the year to Q2 2022, according to figures from the Hungarian Central Statistical Office (KSH). Supported by improving demand, these latest rises follow y-o-y rises 16.9% in Q2 2021 and 2.6% two years ago. In fact, it was one of the highest annual price growth recorded in the country’s recent history.


On a quarterly basis, house prices rose by 5.2% (0.9% inflation-adjusted) in Q2 2022.

Source: Hungarian Central Statistics Office

Pest, the eastern part of Budapest comprising about two-thirds of the capital city’s territory, saw the biggest y-o-y price increase of 33.7% (27.1% inflation-adjusted) during 2021. It was followed by the Northern Great Plain (22.2%), Northern Hungary (21.9%), Southern Great Plain (20.7%), Central Transdanubia (19.9%), Southern Transdanubia (19.7%), and Western Transdanubia (17.4%). In Budapest, the mean price for second-hand homes also rose, albeit at a more modest 9.7% (4.3% inflation-adjusted) y-o-y last year.

Nationwide, the average price of new homes was HUF 45.6 million (€107,862) in Q1 2021, while second-hand home prices averaged HUF 22.8 million (€53,931).

After falling in 2019-20, demand has bounced back strongly last year. The total number of second-hand homes sold rose by 13.8% to 142,138 units in 2021 from a year earlier, a sharp improvement from annual declines of 14.3% in 2020 and 5.7% in 2019. In fact, foreign demand is now recovering, amidst weakening forint against the euro.

Yet residential construction activity remains weak. In the first half of 2021, housing completions in Hungary fell by 6.8% y-o-y to 9,133 units, according to KSH. The number of newly built homes dropped by 16.8% in Central Hungary and by 1.9% in Great Plain and North. In contrast, newly built homes increased 21.6% y-o-y in Transdanubia over the same period.

The overall economy remains fundamentally strong. Hungary’s economy grew by a robust 7.1% during 2021, following a 5% contraction in 2020 due to the Covid-19 pandemic. In Q2 2022, the economy expanded by 6.5% from a year earlier, following y-o-y expansions of 8.2% in Q1 2022 and 7.1% in Q4 2021, supported by strong private consumption and a rebound in exports, according to the KSH. The country’s overall economic growth this year is expected to slow slightly to 5.2%, according to the European Commission’s forecast, amidst rising inflation, tightening fiscal and monetary policies, as well as trade disruptions and rising uncertainty due to Russia’s war of aggression against Ukraine.

Local house price variations

Budapest and Pest have the most expensive housing in Hungary, with the average price of second-hand homes reaching HUF 39.7 million (€ 93,491) in 2021.

In Transdanubia region, the average price of second-hand homes was HUF 22.3 million (€52,515) in the central area, HUF 21.6 million (€50,867) in the western area and HUF 15.8 million (€37,208) in the southern area.

Hungary mean price sold 2nd hand homes

Great Plain and the North region had the least expensive housing in the country. In Northern Hungary, the average house price stood at HUF 11.7 million (€ 27,553) during 2021 while it was about HUF 14.3 million (€33,676) in the Northern Great Plain and HUF 14.6 million (€34,382) in the Southern Great Plain.

The large concentration of foreign homebuyers in Budapest is one of main reasons of the huge price difference between the city and the whole country. A foreigner buying a home in Budapest spends on average above HUF 40 million (€94,195).

Demand is improving

The number of second-hand homes sold rose by 13.8% to 142,138 units in 2021 from a year earlier, according to KSH. This is a sharp improvement from annual declines of 14.3% in 2020 and 5.7% in 2019.

Hungary mean price sold 2nd hand homes

“After a downturn in 2020, linked to the Covid-19 pandemic, the number and price of homes sold in 2021 rose rapidly during the year,” said KSH.

By region:

  • In Central Hungary, second-hand home sales increased 12.8% y-o-y to 37,820 units in 2021, in stark contrast to annual falls of 21.7% in 2020 and 12.4% in 2019. In Budapest, sales surged by 32.2% to 29,418 units in 2021 while sales in Pest dropped 25.4% to 8,402 units.
  • In Transdanubia, second-hand home sales were up 15.6% y-o-y to 44,023 units last year, following annual declines of 13.8% in 2020 and 2.6% in 2019.
  • In Great Plain and North, sales increased by 13% to 60,295 units in 2021 from a year earlier, after falling by 9.3% in 2020 and 2.6% in 2019.

Foreign buyers rising again

In the first half of 2022, the number of foreigners interested in Hungarian residential properties rose by 10%, partly due to weakening domestic currency against the euro, according to ingatlan.com.

Budapest remains to be the favorite destination among foreign investors, accounting for more than half of foreign property demand. District 7 was the most popular location for foreign homebuyers, followed by District 6 and District 8.

Towns and villages in the counties around Lake Balaton are also sought after, representing about 11% of foreign demand.

Home purchases by foreigners plunged in the past two years, mainly due to pandemic-related travel restrictions. But before the Covid-19 pandemic, foreign homebuyers had been steadily rising in Hungary – from 3,207 purchases in 2017 to 3,529 purchases in 2018 and finally to 3,753 purchases in 2019. Chinese citizens accounted for more than half of the total, followed by EU citizens (22%), primarily Germans. Other large groups of buyers were Israelis (11%), Russians (4%) and Turks (2%).

Hungarian law requires that real estate purchases shall be concluded through private contract (purchase agreement) countersigned by a lawyer. Non-Hungarian citizens must gain the approval of the relevant Administrative Office to purchase property as a private person. Most foreigners should receive a permit within 2-3 months.

Most lawyers advise foreign nationals to set up a company registered in Hungary in order to purchase property. In this case, no permit is needed. This is a fairly swift and easy procedure (taking 1-2 days), and all expenses can be written off.

Residential construction activity remains weak

Housing completions in Hungary fell by 6.8% y-o-y to 9,133 units in the first half of 2022, in contrast to a 12.8% increase in the same period last year, according to KSH. In H1 2022:

  • In Central Hungary, newly built homes dropped 16.8% y-o-y to 5,197 units, following a huge 67.7% surge in H1 2021. In Budapest, completions fell by 20.1% y-o-y to 3,621 units in H1 2022 while they dropped in Pest by 8.3% to 1,576 units.
  • In Transdanubia, newly built homes rose by 21.6% y-o-y to 2,374 units.
  • In Great Plain and North, completions dropped slightly by 1.9% y-o-y to 1,562 units over the same period.

Hungary housing premits

In the first half of 2022, the total number of permits issued for residential buildings fell by 7.3% y-o-y to 7,938, following a strong growth of 45.3% in 2021 and a fall of 20.3% in 2020, according to KSH. In contrast, dwelling permits rose by 16% y-o-y to 17,715 units in H1 2022, after increasing by 32.7% in 2021 and declining by 35.8% in 2020.

Hungary dwellings stock

Currently, there are about 4,519,271 dwelling stock in Hungary, up by 0.4% from a year earlier.

Housing cycle

It was in 2014 that the housing market started to recover from the 2009 global financial crisis, when the forint’s steep decline had caused the mortgage market to collapse. From 2008 to 2013 house prices fell by 21% (36% inflation-adjusted). But legislation in November 2014 required financial institutions to convert all outstanding foreign currency-denominated loans into HUF by December 2015, by which time only 0.2% of the stock of housing loans was in foreign currency, sharply down from 52% in December 2014. In 2014 house prices rose 6.6% (7.3% inflation-adjusted). House prices have been rising by double-digits annually since then, surging by a total of 120% (99% inflation-adjusted) in 2014-19.

House price growth decelerated to 6.8% (3.9% inflation-adjusted) in 2020, amidst the economic repercussions brought by the Covid-19 pandemic and the ensuing lockdown measures and travel restrictions.

The housing market bounced back quickly in 2021, registering a house price increase of 21.4% (13.4% inflation-adjusted), as economic conditions gradually improve.

HOUSE PRICES, ANNUAL CHANGE (%)

Year Nominal Inflation-adjusted
2008 0.21 -3.87
2009 -9.26 -13.75
2010 0.53 -3.63
2011 -3.90 -7.68
2012 -6.56 -11.34
2013 -3.57 -4.28
2014 6.56 7.30
2015 14.36 13.77
2016 15.37 13.96
2017 14.65 12.08
2018 16.51 12.85
2019 18.12 14.24
2020 6.83 3.91
2021 21.41 13.38
Sources: MNB, Global Property Guide

Part of the recovery in housing demand during 2014-5 was caused by other government measures. At the beginning of 2013, the government increased the amount of 5-year loan subsidies, the maximum value of subsidized loans, and the loan house price threshold, causing significantly stronger credit demand in the second half of 2013.

From July 1, 2015 a non-refundable subsidy, the family housing allowance (CSOK) became available for buying new- and used homes, for apartment expansions, and for home construction. It was expanded in March 2018, allowing families returning from abroad and those already owning a property about to buy new or resale homes to apply for the CSOK. The government now repays HUF 1 million (€ 2,355) of the mortgage loans of families with at least two children. Moreover, every woman under the age of 40 is also eligible for a CSOK interest-free loan when she first gets married.

By end-2021, nearly 192,000 families had already benefited from this program, receiving a total of HUF 467.4 billion (€1.1 billion). The average amount of loan per disbursement was HUF 2.4 million (€5,652).

As a result of the surge in demand residential construction rose sharply, almost half the new supply being in Budapest and Pest. In 2020, the total number of newly built dwellings in Hungary soared 33.5% y-o-y to 28,208 units despite the pandemic, following annual rises of 19.5% in 2019, 22.9% in 2018, 44% in 2017 and 31.3% in 2016, based on KSH figures analyzed by Global Property Guide. However in 2021, newly built dwelling fell by 29.5% y-o-y to 19,898 units, amidst rising material costs.

Budapest rental yields good, rents rising again

Gross rental yields in Budapest are moderately good. In Buda, Budapest’s greener side, apartments have relatively higher yields ranging from 5.63% for a smaller-sized apartment of 90 sq. m. to 5.73% for a larger apartment of 120 sq. m., based on a Global Property Guide research. Apartments in Pest, Budapest’s business and commercial centre, have slightly lower rental yields ranging from 5.16% to 5.24%.

After plummeting in the past two years due to travel restrictions imposed to curb the spread of the coronavirus, as well as the new rules restricting Airbnb rentals, apartment rents in Budapest are rising again.

By end-Q2 2022, apartment rents in Hungary surged 23.4% from a year earlier, according to the latest KSH-ingatlan.com rent index analysis. In Budapest, rents increased 24% y-o-y over the same period.

“Although the rise in rents is undoubtedly fast, the longer-term data, which also takes inflation into account, show a more moderate rise in prices,” said László Balogh, the leading economic expert of ingatlan.com. “Compared to 2015, average rents rose by almost 66 percent nationally and by 57 percent in the capital until June, according to the rent index.”

Balogh noted that the decline in the supply of rental apartments is the main reason for the surge in rents. “The rise in rents across the country is partly due to a much tighter supply. A year ago, there were 20,000 apartments for rent nationwide, but this year there are just over 10,000 rentals to choose from, a 49 percent drop.”

The average monthly rents for brick apartments in Budapest currently range from HUF 125,000 (€294) to HUF 350,000 (€825). Districts 9, 11, and 13 are among the most expensive areas while Districts 4 and 10 and the peripheral districts on the Pest side are the cheapest.

Interest rates are now gradually rising

Housing loan interest rates remain relatively low, but are now beginning to rise. In August 2022, the average interest rate on housing loans was 4.83%, up from 4.49% a year earlier and 4.58% two years ago, according to the European Central Bank (ECB).

Hungary interest rates

The average interest rates on loans for house purchases by initial rate fixation (IRF) in August 2022:

  • IRF of up to 1 year: 6.52%, up from 4.71% a year earlier and 3.74% two years ago
  • IRF over 1 year and up to 5 years: 4.7%, slightly up from 4.65% in the previous year and 4.97% two years earlier
  • IRF over 5 years: 4.83%, up from 4.49% in August 2021 and 4.57% in August 2020

Mortgage market growing strongly

More housing is now being bought with loans. During 2021, the value of new housing loans disbursed rose strongly by 36.2% to HUF 1.25 trillion (€2.94 billion), an acceleration from modest y-o-y rises of 4.6% in 2020 and 6.5% in 2019. Likewise, the total number of new housing loans disbursed increased 16.7% to 121,347 last year, a sharp improvement from a 6.6% decline in 2021 and a minimal 2.3% growth in 2020.

Hungary new housing loans disbursed
  • New loans borrowed for the purchase of second-hand homes, which constituted more than two-thirds of new housing loans, surged by almost 35% y-o-y to HUF 857.8 billion (€2.02 billion), a sharp acceleration from a 6.1% increase in 2020.
  • Loans for buying new homes, which represented 10.9% of new loans, rose strongly by 21.7% to HUF 135.61 billion (€319.4 million) last year, up from the prior year’s 4.7% increase.
  • The volume of loans for housing construction rose slightly by 2.1% to HUF 80.4 billion (€189.3 million) last year, in contrast to a 9.8% fall in 2020.
  • Loans for home renovation almost tripled to HUF 118.72 billion (€279.6 million) in 2021, in stark contrast to a 14.9% decline in 2020.

This increased loan demand stems from Hungary’s relatively low interest rates, plus subsidized lending schemes such as the Family Housing Subsidy Scheme (CSOK), and government’s newly introduced home improvement subsidy.

“In the fourth quarter of 2021, credit institutions signed housing loan contracts worth HUF 325 billion with households, which, with the substantial contribution of the new housing subsidies available from 2021, resulted in a 40 percent increase compared to the volume of disbursements before the outbreak of the pandemic,” said the central bank’s Housing Market Report – May 2022. “Within housing loan applications, the volume of loans applied for the purchase and construction of new homes increased, with the FGS Green Home Programme launched in October playing a significant role.”

Hungary  housing loans outstanding

The value of housing loans outstanding increased 15% to HUF 4.58 trillion (€10.8 billion) in 2021, according to the KSH’s Residential Mortgages 2021 report, following y-o-y rises of 10% in 2020 and 9.3% in 2019.

Despite this, the size of the mortgage market remains small at about 8.3% of GDP in 2021, slightly up from 7.8% of GDP in 2019.

The share of “problem-free” loans had slightly declined to 96% in 2021, from more than 97% in 2020, according to KSH. Yet it remains far higher than the 93% in 2018 and 89% in 2016. The non-performing exposure ratio also increased to 3.7% last year, from 2.4% in 2020.

Robust economic growth, soaring inflation

Hungary’s economic recovery is moving forward at a pace that is “among the fastest in the European Union (EU)”, noted the country’s Finance Minister Mihaly Varga, registering a real GDP growth rate of 7.1% in 2021. During 2020, the economy declined by 5%, its biggest contraction since 2009 due to the Covid-19 pandemic.

In Q2 2022, the economy expanded by a robust 6.5% from a year earlier, following y-o-y expansions of 8.2% in Q1 2022 and 7.1% in Q4 2021, supported by strong private consumption and a rebound in exports, according to the KSH.

Hungary gdp growth

Finance Minister Varga noted that all branches of the economy – particularly industry, trade, tourism, the financial sector and ICT – contributed to the Q2 growth, with the exception of agriculture, which was hit by drought.

“Industry, trade, tourism, the financial and ICT sectors performed well,” said Varga.

Quarter-on-quarter, the economy expanded by 1% in Q2, after growing by 2.1% in the previous quarter.

However, Hungary’s overall economic growth this year is expected to slow to 5.2%, according to the European Commission’s forecast. “The slowdown is expected to affect all demand components and be driven by rising inflation, tightening fiscal and monetary policies, as well as trade disruptions and rising uncertainty in the wake of Russia’s war of aggression against Ukraine. These factors are expected to weigh on growth throughout the forecast horizon: real GDP growth is forecast to decrease from 7.1% in 2021 to 5.2% in 2022.”

Unemployment stood at 3.4% in the three months to August 2022, down from 4.1% in the same period last year, according to KSH figures. The country’s unemployment rate dropped to an annual average of 4% in 2016-21, from 9.4% in 2010-15, based on figures from the IMF.

Though, inflation is now surging. In August 2022, the nationwide inflation rate rose to 15.6%, up from 13.7% in the previous month and 4.9% a year earlier. In fact, it was the highest level recorded since May 1998, driven by a surge in food and other commodity prices. It is also far higher than the central bank’s target range of just 2% to 4%.

Orban reelected for a fourth straight term

Since coming to power in 2010, Hungary’s nationalist prime minister Victor Orbán has concentrated power and media organs in his hands, and regularly clashes with Brussels over migration and rule-of-law issues.

Economic growth has boosted his popularity, propelling him and his party, Fidesz (the Hungarian Civic Union) to victory in the 2014 elections, and again in the 2018 national elections, when the Fidesz–KDNP alliance won a two-thirds parliamentary majority, with 133 seats out of 199.

In a move towards the creation of an "illiberal" state, in April 2017 the Hungarian Parliament imposed stringent restrictions on foreign universities, a move primarily directed towards the Central European University (CEU), founded by philanthropist and Hungarian NGO supporter George Soros. Forbidden to accept new students after January 1 2019, the CEU re-launched all U.S. accredited degrees in Vienna from September 2019.

Orban’s growing authoritarianism has met resistance. In May 2017, large anti-corruption street protests occurred in Budapest, expressing support for CEU and NGOs. During the same month, two United Nations Special Rapporteurs also expressed their objection to the Hungarian government’s draft “Bill on the Transparency of Organisations Financed from Abroad” that would limit NGO activities. The bill was eventually passed as law in June 2017.

Then in 2020, a board of trustees appointed by the government has taken over the management of the Budapest-based University of Theatre and Film Arts (SZFE) and has abolished the university’s autonomy.

This was followed by yet another move to shut down the country’s last independent political radio station, Klubrádió. Klubrádió’s broadcasting license, which expired last February 2021, was not renewed forcing it to go off air and the station’s former frequency had been allocated to a station owned by a group close to Orban. The station’s fate has attracted international attention and in June 2021 the European Commission launched an “infringement procedure” against Hungary, which has recently lead to a legal action. In July 2022, the European Commission decided to refer Hungary to the Court of Justice of the European Union, stating that its decision to reject Klubrádió’s application to use the Budapest 92.9 MHz frequency was made on “highly questionable grounds” and had applied rules in a “disproportionate and discriminatory manner”, thus violating the freedom of speech as enshrined in the Charter of Fundamental Rights of the EU.

Press freedom in the country has generally deteriorated. Hungary is currently ranked 85th  out of 180 countries on the 2022 World Press Freedom Index by Reporters Without Borders (RSF) – up from 92nd in 2021 but sharply down from 23rd in 2010.

“Prime Minister Viktor Orbán, whom RSF has deemed a press freedom predator, has built a media empire whose outlets follow his party’s orders. Independent media maintain major positions in the market, but they are subject to political, economic, and regulatory pressures,” said the RSF.

Despite all these, Orban won a fourth straight term in power during the April 2022 general elections.


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