Housing market forecast for 2025
In recent times, dramatic changes have occurred in Hungary’s housing market. Prices have soared, properties are changing hands almost instantly, and sellers are facing a huge number of interested buyers. In some cases, the competition for properties is so fierce that buyers are outbidding each other, paying millions of forints more than the original asking price.
The rise in housing prices is not a recent phenomenon. The end of 2022 and the beginning of 2023 did not bring significant price increases, with property prices rising by an average of 2.7 percent nationwide in 2023. However, in 2024, this figure was already 7.8 percent nationwide, and 11.8 percent in Budapest. The rise in prices started in early 2024 and accelerated from the summer onwards. The phenomenon is partly a matter of perception, as after a year and a half of stagnation, the dynamics of previous years have returned in the past year. The increased demand also contributed to the rise in prices, which gradually narrowed the supply.
The low housing market turnover in 2023 can be explained by several factors. Due to the inflation that started in 2022 and peaked in 2023, mortgage interest rates skyrocketed. In addition, people preferred to save or invest rather than spend. The value of properties grew slowly due to the subdued demand, while the state issued favorable interest-bearing government bonds that provided higher returns. Therefore, the part of the population with savings preferred to buy government bonds rather than apartments. However, in 2024, inflation eased, and with the decline in people’s inflation expectations, the housing market picked up again. At the end of 2024, prices continued to rise as the market began to price in the increased demand expected for early 2025.
One of the triggers for the housing market frenzy in January 2025 was the Hungarian Government Bond, especially the Premium Hungarian Government Bond (PMÁP), issued by the government. In 2025, several changes occurred with government bonds. On the one hand, retail government bonds matured, and on the other hand, the yield on PMÁP decreased significantly. In this situation, many people may have decided to withdraw their investments and look for other, more profitable opportunities. This is where the booming housing market comes into the picture again. According to Balogh, in 2023, the ratio of properties bought for own use and for investment purposes was 90-10 percent. The market is now beginning to return to the normal situation, where this ratio is 70-30. People have started buying properties for investment purposes again. Realistically, about 5-10 percent of former government bond investors may buy property for investment purposes. It can also be expected that the government bond frenzy will subside in the first half of the year, but this does not necessarily mean that prices will fall.
The biggest housing purchase rush is experienced in Budapest and the big rural cities. Within Budapest, demand has increased the most in the city center and the districts close to the city center. In these districts, typically used apartments change hands, but demand for newly built apartments has also increased significantly. The cheaper apartments are the fastest to sell, but it is important to note that cheap is a relative term. While earlier it was possible to buy an apartment for 15 million forints, this amount has now increased to 30, or rather 40 million forints. The price per square meter of 30-40 square meter studio apartments is the highest on the market, as these are the most sought-after properties.
It will be worthwhile to watch how the prices of properties in the agglomeration change. In booming real estate markets, those looking for a home for their own use start to move further and further out of the big cities. In 2023, a not-so-good year for the real estate market, Budapest’s population increased again after many years. In 2025, however, with the boom in the real estate market, the exodus to the agglomeration may start again. According to the analyst of ingatlan.com, the real estate frenzy is not limited to Budapest, a similar process is taking place in quite a few large rural cities as well. In Debrecen, property prices are higher than in some outer districts of Budapest, which is understandable as the second largest city in the country, a university town, and due to government-supported investments. Szeged is in a similar situation to Debrecen. It is clear, therefore, that the housing market is booming in economically important regions, but this is causing significant differences between the property prices of these regions and the less important parts of the country. There can be as much as a five-fold price difference between the housing prices of some county seats.
The basis of the housing purchase rush is that the proportion of people living in their own homes is very high in Hungary. According to a 2020 survey, 91.3 percent of Hungarians live in their own property, while in Western Europe this ratio is around 50-70 percent. Anyone who has once acquired their own property would not really want to move back to a rental, and those who live in a rented property strive to have their own property. In Hungary, therefore, there is a huge demand for properties, and this is a natural consequence of the high property prices.