At the beginning of 2025, the macroeconomic fundamentals determining housing market demand remained stable. The level of employment in the national economy continued to be historically high, with a growing trend in wages in the private sector that is strong but slower compared to previous years, and an ongoing increase in real wages.
In 2025 Q1, following annual growth of 7 per cent, the number of housing market transactions nationwide exceeded the long-term average, primarily due to the increase in turnover observed in rural areas, which was supported by a wide range of housing programmes and household savings from the government securities market. The heightened investor interest in 2024 Q4 eased in 2025 Q1, with investor participation returning to a balanced level on both the buyer and seller sides of the market, which may have been influenced by a decline in rental yields. At the same time, as a result of limited supply and strong demand, bidding characterised 8.3 per cent of sales on a national average, while in Budapest, an unprecedented 18 per cent of properties were sold above the asking price in Q1.
In 2024 Q4, housing prices in Hungary rose by 15.1 per cent year on year, which was an outstanding rate even by European Union standards and corresponded to a 10.9 per cent increase in real terms. Based on preliminary data, annual housing price growth reached 15.0 per cent nationwide and 19.2 per cent in Budapest in 2025 Q1, with the latter also recording an extremely high quarterly increase of 8.7 per cent. In 2024 Q4, we estimate that housing prices exceeded the level justified by fundamentals by 14.3 per cent nationwide, halting the steady decline in overvaluation that had been ongoing since early 2023. Overheating on the housing market was indicated by housing prices rising faster than rents, incomes and construction costs throughout 2024. Higher house prices than justified by fundamentals also manifest themselves in poorer housing market accessibility, which, looking ahead, may force buyers using credit to take on higher financial strain. 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.
Parallel to the upturn in housing market demand, the volume of housing loans also increased significantly in Q4, by 91 per cent year on year, and in the first two months of 2025, the value of disbursements exceeded HUF 120 billion per month. The number of concluded housing loan contracts grew at a more moderate pace than the volume of loans disbursed, meaning that the upturn in housing loans was mainly attributable to an increase in contract sizes. By February 2025, the average contractual amount 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. Based on the Lending Survey, banks reduced spreads on housing loans in 2025 Q1, but looking ahead to the next six months, they plan to tighten price-related conditions in line with the cost of bank funding. Banks expect the upturn in demand for housing loans seen in Q1 to continue. In the case of market-based housing loans, with average APRs stagnating at 6.7 per cent for months, housing affordability with a mortgage has deteriorated due to accelerating housing price dynamics. For families who do not plan to have more children and are therefore not eligible for most housing subsidies, purchasing new or used homes in more expensive areas, such as the capital, with the help of loans, would in most cases mean excessive financial strain.
The 13,300 occupancy permits issued for newly built residential properties in 2024 represent a 29 per cent decline compared to 2023. The last time the number of homes completed was lower than this was in 2016. This means the annual renewal rate of the domestic housing stock was 0.29 per cent, the lowest in Europe. Looking ahead, the modest construction volume is indicated by the fact that building permits were issued for 20,500 new homes in 2024, which was 27 per cent less than in 2023. In 2024 Q4, residential construction costs rose significantly even compared to the EU average, by 5.1 per cent, driven by a 12.8 per cent increase in construction labour costs. In 2025 Q1, banks reported brisk demand for housing loans even under unchanged lending conditions, and looking ahead to the next six months, a high proportion of banks expect demand to pick up further in this segment. At the end of 2025 Q1, 21,600 new condominium flats were under construction nationwide, representing a quarterly increase of 19 per cent. 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 in the capital. In the rural new-build market, 1,971 homes made it to the market in 2024 Q4 and 2025 Q1, with the available supply increasing by 7 per cent. The number of new homes sold in Budapest in 2025 Q1 set a new record, exceeding the previous quarter’s outstanding sales by 11 per cent. 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 percent.