Budapest, 27 May 2025 – At the beginning of 2025, mainly funds from household savings acted as a supporting factor in demand in the housing market. In addition, the volume of housing loan disbursements grew significantly in 2024 Q4, which largely reflected an increase in contract size arising from higher house prices, as shown in the Housing Market Report published by the Magyar Nemzeti Bank today.
At the beginning of 2025, the macroeconomic fundamentals determining housing market demand remained unchanged and the significant volume of household savings released from the government securities market also supported the upturn in housing market demand. In 2025 Q1, the number of housing market transactions nationwide exceeded the long-term average, primarily due to the increase in turnover observed in rural areas. As a result of limited supply and strong demand, on average, 8.3 per cent of sales nationwide, and 18 per cent in Budapest, were above the advertised price in Q1.
In 2024 Q4, house prices in Hungary rose by 15.1 per cent year on year, which corresponded to a 10.9 per cent increase in real terms. Based on preliminary data, annual house price growth reached 15.0 per cent nationwide and 19.2 per cent in Budapest in 2025 Q1. House prices rose faster than rents, incomes and construction costs throughout 2024, as a result, we estimate that house prices exceeded the level justified by fundamentals by 14.3 per cent nationwide, indicating a rise in overvaluation. However, the financial stability risk stemming from overheating and a potential housing price correction are mitigated by the fact that mortgage loans outstanding typically have low loan-to-value ratios.
The volume of housing loan disbursements also increased significantly in Q4, by 91 per cent year on year, which was mainly attributable to an increase in contract sizes. By February 2025, the average contract size of market-based housing loans for the purchase of used homes rose to HUF 20 million, and to HUF 27 million for the purchase or construction of new homes. Banks, responding to the Lending Survey, expect the rise in demand for housing loans, seen in 2025 Q1, to continue in Q2 and Q3. With average APRs stagnating at 6.7 per cent for months in the case of market-based housing loans, housing affordability with a mortgage has deteriorated due to accelerating house price dynamics.
Looking ahead, modest construction volume is indicated by the fact that the number of building permits, issued in 2024, was 27 per cent less than in 2023. Although more modest than the peak in 2024 Q4, the sale of a significant number of new homes was launched in Budapest in Q1, but strong demand caused the number of vacant new homes available for purchase to fall by 11 per cent year on year. The average price per square metre of new homes in the capital rose to HUF 1.68 million by the end of 2025 Q1, representing a further acceleration in annual price growth to 14 per cent.
https://www.mnb.hu/en/publications/reports/housing-market-report