Housing

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In March 2023, construction permits were issued for 19% less floor space in Hungary than in the same period of the previous year. The planned floor space fell significantly for residential buildings (-42%), but rose moderately (+5.2%) for non-residential buildings (with a decreasing number of permits). The former saw a decline for both single-family and multifamily residential buildings, while for the latter the growth was mainly driven by an increase registered for commercial buildings.

In March the increase in rents continued at a more moderate pace than in the previous two months: they became 0.8% higher nationally and 0.9% higher in Budapest in a month, rising in all district groups in the capital city. In annual terms, the growth rate of nominal rents continues to be lower than inflation; therefore, their real value was 5–6% below the year-earlier value. After a slight increase in February, real rents compared to the previous month stagnated in March.

The growth rate of 7.5% for the housing loan portfolio in 2022 has slowed compared to the previous four years. Loans approved and disbursed fell short of the previous year. The weight of second-hand housing purchases declined, while lending for new housing expanded. In the second half of 2022, in addition to the increase in lending for new housing, the amount disbursed for the purchase of second-hand housing barely exceeded half of the value for the same period of the previous year.

In the 1st quarter of 2023 a total of 3613 new dwellings have been built, 20% fewer year-on-year. The number of dwellings to be built, based on issued building permits and simple declarations, was 4989, this being 38% less than in the same period of 2022.

Due to rising labour and material costs, dwelling construction costs rose by 21% in 2022 compared to the previous year. The increase in the cost of materials (24%) continued to play a larger role in the rise, mainly driven by global developments and partly as a result of this by rising domestic prices of building materials (24%). Labour costs were also up significantly by 16% compared to a year earlier.

In Q1-3 2022, 4.6% fewer homes were sold than in the same period of the previous year. The decline was observed in all quarters in both the new and second-hand housing markets. After a surge in the first quarter, house price growth gradually slowed down to 2.6% in the third quarter. The slowdown in the increase in prices of second-hand dwellings can be observed in all areas of the country.