Hungarian real estate has suffered from too much supply with a decline in demand for the past year. This has resulted in prices stabilizing and, in some cases, even falling. Usually, prices rise at the beginning of the year, but this was not the case this year. In fact, prices are down by two percent overall.
Last Year’s Turnaround
The housing market started to decline at the beginning of 2022, with 30% fewer second-hand homes being sold than the previous year. As a result, supply started to expand. After falling for most of 2022, prices started to rise the first quarter of this year. This momentum was lost during the year, according to Hungarian Central Statistical Office Data. The number of sales fell quarter after quarter since the start of the year, and residential real estate supply has been increasing. This makes for a ripe investment opportunity.
Compared to the 130,000 homes that exchanged hands last year, roughly 100,000 to 110,000 sales are expected for this year. There is a surge in apartment real estate sales expected with the approaching start of the university year. Latest data shows that the house prices are about 9% higher than this time last year. This is a moderate increase compared to the 15% to 25% in the previous years.
In the next several months, changes are expected because of housing subsidy restructuring. In addition, the family housing support found in the cities is discontinued as of December 31st. With this plan, families can get as much as HUF 10 million in subsidies for newly built property and HUF 15 million as a soft loan if they have three kids or plan to have them.
In this framework, you had 4% of the purchase price tax exempt, 3% subsidized loan, and a tax refund subsidy. There will be some adjustments to this, and it will only be available in small areas of less than 5,000 people.
Housing markets and home loan markets influence each other. Loan contracts decreased by half in the first part of the year. The households signed 700 billion forints of new contracts, which was just over half of what was signed last year. The first months of summer brought a slight uptick in household credit. Financial and household service providers signed 53.2 billion forints in new contracts with housing loans. This is an unprecedented number so far for the year.
With all these factors coming together, this year is a great time to invest in Hungarian real estate.
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