Published: November 16 2023
In a significant shift, Budapest housing prices have experienced their first annual decrease in nine years. The decrease in prices is primarily attributed to a decline in smaller municipalities and a decrease in demand due to decreased consumer confidence. However, there are positive indicators for the future, including the launch of new family support programs and expected growth in real wages. This article will explore the key findings and trends in Budapest's housing market.
Decrease in Housing Prices
According to the Hungarian National Bank's housing market report, housing prices in Budapest decreased by 0.8% on an annual basis in the second quarter of 2023. This is the first time in nine years that prices have declined. The decrease was more pronounced in smaller municipalities, particularly for detached houses. In contrast, prices in Budapest and other urban areas saw modest increases.
Impact of Consumer Confidence and Real Wages
The decline in housing prices can be attributed to the low consumer confidence resulting from a decrease in real wages. The high inflation rate has led to a decrease in purchasing power and has negatively affected consumer sentiment. However, the Hungarian National Bank expects an improvement in consumer confidence with the introduction of new family support programs, such as CSOK Plus from 2024, and the projected growth in real wages.
Transaction Volume and Rental Market
The number of real estate transactions decreased in the third quarter of 2023, reflecting the low demand in the market. However, there was a slight increase compared to the previous quarter, potentially due to decreased prices and increased bargaining power for buyers. In the rental market, while the supply of rental apartments remained stagnant, rental prices increased by 13% on an annual basis.
Mortgage Market Outlook
Although the volume of new mortgage contracts in the third quarter of 2023 was lower than the previous year, banks are experiencing a growing demand for housing loans. The introduction of more favorable loan terms is expected to further stimulate the mortgage market in 2024. However, the accessibility of new housing purchases through loans has deteriorated in rural areas, while in Budapest, it has remained low for households without children.
Future Prospects for the Housing Market
Despite the current challenges, the Hungarian National Bank foresees a positive outlook for the housing market from 2024 onward. Factors contributing to this include expected growth in real wages, more favorable loan conditions, and the introduction of new family support programs like CSOK Plus. However, it is noted that the withdrawal of certain incentives, such as the urban CSOK program, may lead to a shift in demand.
The Budapest housing market has experienced its first annual decrease in nine years, primarily driven by decreased demand and low consumer confidence. However, there are positive indicators for the future, including projected growth in real wages and the introduction of new family support programs. The overall outlook for the housing market remains cautiously optimistic, with the expectation of increased activity and stability in the coming years.
Questions & Answers
What is the current trend in Budapest housing prices? According to the article, Budapest housing prices experienced their first annual decrease in nine years. They decreased by 0.8% in the second quarter of 2023 but showed a slight increase in the third quarter.
Which areas in Hungary saw a decline in housing prices? The decrease in housing prices was primarily seen in smaller towns and especially in the case of family houses, where it exceeded 8%.
How much did housing prices increase in Budapest and other cities in Hungary in the past year? On average, housing prices increased by 4.9% in Budapest and 1.1% in other cities in Hungary over the course of one year.
What factors are influencing the housing market in Hungary? The low transaction volume, decrease in real wages, and low consumer confidence are all factors that are affecting the housing market in Hungary.
What is the demand for rental apartments like in Budapest? While the supply of rental apartments remained stable, rental prices increased by 13% on an annual basis. This trend of decreased affordability is consistent with many other European markets.
Is there a positive outlook for the housing market in Hungary in the future? The Hungarian National Bank expects a growing trend in the housing market from 2024 onwards due to expected growth in real wages, more favorable lending conditions, and new family support measures such as CSOK Plus.
What is the current demand for housing loans in Budapest? Although the volume of new housing loan contracts decreased by 41% in the third quarter of 2023 compared to the previous year, there are positive signs of increasing demand for housing loans.
What percentage of housing loans were taken alongside the CSOK subsidy? According to the article, 37% of the housing loans disbursed during the third quarter were taken alongside the CSOK subsidy. The share of interest-supported urban CSOK loans accounted for 19% of the first quarter's housing loan disbursements in 2023.
What impact do the CSOK Plus and the urban CSOK loan restrictions have on the housing market? The Hungarian National Bank does not expect an overall increase in demand due to the introduction of CSOK Plus and the narrowing of the target group for the babaváró loan. However, they predict that these measures may create a specific group of buyers who may wait or create a surge in demand due to the cessation of urban CSOK and stricter babaváró loan conditions.
What is the current situation in the construction industry? The volume of contracts in the construction industry was 24% lower at the end of August 2023 compared to the same period in the previous year. Insufficient demand is among the factors contributing to this decline.