Fewer home sales

In 2019, fewer homes were sold than a year earlier, the first decline in six years. Preliminary transaction data fell by 8% from 164 thousand in 2018 to 151 thousand in 2019, but this is expected to improve in the coming months due to the receipt of all 2019 data. Declining home transactions were driven by an 8.7% fall in second hand home sales offsetting a 5.0% rise in new home sales. In the first quarter of 2019, declining sales of second-hand homes were still offset by expanding new housing sales, but the aggregate housing market turnover in the following quarters was (10–12%) lower than a year earlier.

In the first quarter of 2020, the number of sales did not reach three-quarters of the same period of the previous year, based on the data processed so far. Due to a slowdown in data receipts in recent months, this information is not yet suitable for a realistic assessment of sales trends.

In 2019, the number of home sales slightly increased in villages and decreased in urban settlements. The larger the settlement, the greater the decline and the greater the data processing time: preliminary transaction data show a 6% decline in smaller towns, a 12% drop in county seats and a 19% fall in Budapest. Due to data not yet received, corrections are to be expected especially in the latter case. Diverging territorial processes reflect measures affecting the housing market. High-interest government bonds (Magyar Állampapír Plusz) have dampened demand for investment real estate in larger cities from June 2019. Revised housing grants for families, in turn, generated a housing boom mainly in the villages. From 1 July 2019, a village CSOK (family home creation subsidy) was introduced, with CSOK grants and loans also available for second-hand home purchases.

Year-on-year rise in home prices

The annual pure price index for second-hand dwellings sold in 2019 stood at 167% (2015 = 100%) based on data processed so far, 15% higher than in 2018, mainly due to a rapid price increase in quarter 1.

In 2019, the price level for new homes was 166% (2015 = 100%), up by 11% from a year earlier, reflecting a slight slowdown in price increases.

House prices continued to rise at the beginning of the year

By the end of 2019, the second-hand housing market, after growing since 2014, had turned around. Following an extremely high price rise at 8.6% in the first quarter, second-hand housing prices rose more slowly (3.4%) in the second quarter. Contrary to preliminary estimates, the third quarter of 2019 already shows a 1.4% increase, while the data processed so far in the fourth quarter indicate a 1.1% decline. The upward revision of housing market estimates is mainly due to data from Budapest. Processing a large number of sales in Budapest takes time. Similar revisions are still to be expected, primarily in relation to fourth quarter results. After peaking (at 173%) in the third quarter of 2019, the second-hand housing price index (2015 = 100%) declined (to 171%) at the end of 2019 and then rose again (to 173%) in the first quarter of 2020. This is a 1.1% increase from the previous quarter. New home prices in the first quarter of 2020 have not yet reached their previous peak at 165%, but have reversed compared to the end of 2019, with the base index approaching its previous peak (at nearly 164%) due to a 5.2% price increase in the first quarter. In the first quarter of 2020, second-hand and new home prices grew by 4.8% and 1.7%, respectively, compared to the same period in 2019.

New housing market focuses on big cities

Prices for dwellings completed since 2019 were largely set in contracts concluded around 2017–2018, therefore they are lower than current supply prices and only reflect the price level of completed new dwellings.

In 2019:

• New home prices increased both in Hungary (by HUF 2.9 million to HUF 30.5 million) and in Budapest (by HUF 3.5 million to HUF 37.6 million).
• At HUF 482 thousand, average prices per square meter were 11% higher than in 2018, being highest in Budapest (at HUF 688 thousand), followed by rural towns (at HUF 400 thousand) and villages (at HUF 387 thousand). In the first quarter of 2020, less than 500 new home sales were registered so far, with new home prices at HUF 24.7 million, still lower than in 2019.

Village CSOK: demonstrable impact on the second-hand housing market

In 2019, the share of smaller settlements within second hand dwelling sales increased (to 60%), while that of Budapest (barely 20%) and county seats (slightly more than 20%) decreased. Sales increased only in the villages, e.g. due to the Village CSOK, which affected perhaps about 19,000 sales in the first three quarters of 2019, increasing sales by 12% year-on-year. Sales declined in all other settlement categories.

In the first quarter of 2020:

• Second hand dwelling prices averaged HUF 16.0 million nationwide, with year-on-year decreases in Budapest, Pest county and the Great Plain and year-on-year increases in other regions.
• Budapest dwellings cost on average more than 2.6 times more than rural ones (HUF 34.1 and 13.1 million, respectively).
• Second-hand dwelling prices at HUF 252 thousand per square meter were HUF 5 thousand lower than a year ago, with HUF 7 thousand growth in Budapest to HUF 651 thousand.
• Settlements supported by the Village CSOK program have registered about 5,000 housing sales, increasing the number of second-hand and new dwellings sold in these villages to more than 24,000 and less than one hundred, respectively, since the decree was promulgated. Home prices averaged 6 million forints in eligible and 19 million forints in non-eligible villages.

The third quarter of 2019 saw a temporary price increase of 12% in the affected small settlements due to Village CSOK rules. Price increases then gradually slowed and returned to the trend of other villages in quarter 1 2020. Eligible settlements recorded the highest prices in Central Transdanubia (HUF 12.0 million) and Pest region (HUF 10.6 million) and the lowest prices in Northern Great Plain (HUF 4.7 million) in the first months. All regions saw price increases ranging from 6% to 19% due to the measure, the lowest in Western Transdanubia and the highest in Southern Great Plain.

EU sees a general rise in home prices

Eurostat's housing market price indices aggregate second-hand and new home prices. In the first quarter of 2020, aggregate housing market price indices (2015 = 100%) were 123% for EU Member States and 122% for the Euro area.

In the first quarter of 2020, the aggregate home price index (2015 = 100%) is still the highest at 173% in Hungary among the reporting countries according to the Eurostat methodology. In the second quarter of 2019, the Hungarian aggregate housing price index continued to rise at 3.3% after an outstanding (8.4 %) first-quarter rise compared to the previous quarter. By the fourth quarter, the gradual slowdown in price growth during the year had turned into a 1.5% decline. Due to the recently received metropolitan data, the indices became higher than previously released. For the time being, the aggregate index shows a smaller (1.4%) price increase in the first quarter of 2020, with only Malta (4.3%) seeing a decline of more than 1%. House prices have risen remarkably fast in Estonia (4.8%) and Portugal (4.9%). Prices in the surrounding countries grew faster than in Hungary: by 4.0% in Slovakia, 3.3% in Romania, 2.7% in Croatia and 1.5% in Austria compared to the fourth quarter of 2019.

Methodological notes

The cumulative values of the published housing market indices are also included in the housing price indices of Eurostat1. Due to the harmonised methodology, these data are fully comparable across the European countries as well as with the aggregated indices of the EU member states.

The source of price observations is the stamp duty database of the National Tax and Customs Administration of Hungary (NAV), from where the anonymized stamp duty data are taken over on a monthly basis directly after their receipt. All home sales concluded by private individuals are subject to this data transfer including home sale prices and the most important characteristics. Through the development, information on housing market transactions was supplemented with information available in the statistical registers of HCSO and relevant for the housing market processes. This gives us more accurate information on the type of dwellings sold on the market and their immediate environment. At present, there are data series of uniform structure comparable in every respect from 2007, which make it possible to analyse changes in home prices in a more detailed and exact way. From 2016 onwards, data received include the nationality and birth year of the given home buyer. The gradually completed data base still allows only preliminary information on the processes of 2019. Our compilation’s data for the period prior to 2019 are final.

As a result of missing data, 1 per cent of all cases were excluded from calculations. In those cases, where there were no data on the floor area of the given dwelling, but all other data were available, the floor area was estimated using the home price and its other characteristics, then we used this estimated value to further calculate. Following this, a log linear regression model was used to analyse the data. Major data used in this model: floor area of the given dwelling, character of the building, specific geographical, administrative and income indicators of the given settlement (or district in Budapest) and the characteristics of the immediate neighbourhood zone and the residential building. New dwellings were separated by NAV based on benefits used to buy a new dwelling. From 2018, data collection OSAP (National Statistical Data Collection Programme) 1078 is also used to identify new dwellings by using its data on buildings constructed for sale and received a put to use permit. The number of transactions available for monitoring the new housing market is still low in the actual period, so the preliminary nature of the results for new housing should be emphasized.

Based on the findings of the first model estimation a further 5 per cent of dwellings were filtered out as outliers from further index calculations. After the exclusion of outliers, based on repeated model estimations, changes in prices were broken down by the composition effect and pure changes in prices. As a result of the log linear method the released price indices resulted from the geometrical average of the given prices in all cases. However, the average prices of this publication are always arithmetical averages, which were calculated after the completion of the outlier filtering.

The Eurostat’s aggregated housing price index is the weighted average of the price indices of second hand homes and new homes presented in our publication. The weights are the aggregate values of home sales realized in the previous year. The most recent Hungarian data published by Eurostat are always preliminary results based on the data recorded by the end of the second month following the reference period, while to this present publication we have used data received for the complete quarter following the reference period.

Further data, information

2.3.6. Housing price indices
2.3.7. Number of housing transactions made by private persons by quarter years
6.2.2.8. Mean price per dwelling by region and settlement type
6.2.2.9. Mean price per sqm by region and settlement type
6.2.2.10. Number of housing transactions made by private persons by region and settlement type
6.2.2.11. Mean price per dwelling by region and building type
6.2.2.12. Mean price per sqm by region and building type

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