Budapest, 7 December 2024 – Thanks to favourable developments in the key macroeconomic fundamentals and demand deferred from 2023, the number of housing transactions returned to close to the long-term average during 2024, and housing lending also expanded substantially. Based on preliminary data, the annual nominal house price dynamics of 9 per cent in 2024 Q2 may have accelerated to 13 per cent in 2024 Q3, while the annualised overvaluation of the housing market moderated significantly by 2024 Q2. HPS Plus also played a significant role in the growth in the volume of housing loans granted, with higher average loan amounts. Demand for new homes also picked up in 2024, but supply is slowly adjusting to the increased demand. In 2024 Q1-Q3, the number of newly built homes delivered fell by 20 per cent and the number of building permits issued by 2 per cent year-on-year. The number of home constructions is expected to continue to decrease this year.
In 2024, macroeconomic factors have generally supported a recovery in domestic housing demand. Stable labour market developments and rising real income in 2024 H1, in line with falling inflation, have had a positive impact on consumer confidence and the intention to invest in housing projects. Looking ahead, demand is expected to pick up further as part of household savings is expected to emerge in the housing market.
In 2024 Q3, the housing market turnover picked up by 16 per cent on average in Hungary and by 31 per cent in Budapest year-on-year. The total number of transactions concluded in the past year was 144,000 in the third quarter, which is 10 per cent below the long-term average annual number of transactions. In addition to improving macroeconomic factors, the increase in housing market transaction volumes was also supported by lower interest rates on loans, the emergence of deferred demand in 2023 and the high loan amounts available under HPS Plus. As significant household savings are expected to enter the market next year, the effect of purchases brought forward may have also increased in 2024 H2.
Nominal house prices continued to rise in 2024 Q2. House prices rose by 9.3 per cent in Budapest, 8.7 per cent in other cities and 9.1 per cent in villages over a year. Preliminary data suggest that annual house price dynamics may have accelerated to 14.7 per cent in Budapest in the third quarter, and from 9.3 per cent to 12.8 per cent on average across the country, significantly above the EU average. In 2024 Q2, the estimated deviation of house prices from the level justified by fundamentals narrowed to 11 per cent nationally, down from 23 per cent a year earlier. We forecast house price growth to remain dynamic in 2024 Q4. The ban on short-term rentals in District VI could push some homeowners towards long-term rentals, increasing the supply of sublets.
In the first eight months of 2024, in parallel with the recovery in housing market demand, the volume of housing loan disbursements also increased significantly by 148 per cent year-on-year, driven by the expansion of market-based lending and the emergence of HPS Plus. Households applied for an average of HUF 26 million in interest-subsidised loans under the programme, compared to an average of HUF 19 million for loans taken out for the purchase of used homes on market terms, while the number of persons eligible from 2024 for interest rate subsidisation for home purchases may have reduced by two thirds.
In 2024 Q1-Q3, 8.6 thousand new residential properties were granted occupancy permits in Hungary, a decrease of 20 per cent nationally and 18 per cent in Budapest regarding the number of homes delivered compared to the same period last year. During the same period, building permits were issued for 14.6 thousand new homes nationwide and 3.4 thousand in Budapest, representing annual declines of between 2 and 34 per cent, and a subdued housing construction volume in 2025 H1. New housing developments by construction companies, and thus supply, are slow to adapt to the demand, which has also seen a significant upturn in the new homes’ market, both in rural areas and in Budapest. The average price per square metre of a newly constructed homes in the capital city was HUF 1.53 million at the end of 2024 Q3, an annual price increase of 5 per cent.
http://www.mnb.hu/en/publications/reports/housing-market-report