In Hungary, the housing market stagnated after the 2008 financial crisis. Prices were low, the desire to buy decreased. However, demand for public housing programs – such as home building subsidies and CSOK – has been significantly boosted. The steep price increase continues to this day, and for average people, not only their own property, but also an affordable sublet is a dream.
The government reports on a housing development capital program in its New Economic Policy Action Plan. With resources of up to 30 billion forints per fund, the construction of new apartments and rental apartments, as well as the development of dormitories, will become available. In the meantime, the HUF 150,000 monthly housing allowance arrives.
The goal is to create affordable housing
The affordability of housing in Hungary has deteriorated significantly in recent years. According to the trend observed in the big cities, housing prices and rents increased much faster than average wages. Since by 2024 it has become almost impossible to get one’s own apartment on one’s own, the government is trying to ease the situation of young adults with various housing subsidies.
From January 2025, it is HUF 150,000 per month housing support starts In addition to the rent, the amount can also be used to pay off the housing loan. The support that can be given as an employee benefit for employees under 35 is also beneficial for the employer, as it could help young employees with reduced taxation. In the case of the HUF 150,000 subsidy, the employer’s tax liability, similar to SZÉP cards, would be HUF 42,000, which would be 23.2% more favorable than a wage increase of the same amount – which would cost HUF 250,000.
Although it is expected to take time for most employers to include the housing allowance in their toolset, it is worth mentioning that it is not a free-to-use allowance. If someone has an unencumbered property, this cannot be an option for them. At the same time, this amount would cover 60% of the average 250,000 HUF apartment rent in Budapest, while the monthly repayment of a 20.1 million HUF loan with a 6.5% interest rate, calculated according to current market conditions, would be fully covered.
Hundreds of billions of dollars can be spent on the real estate market
From the investor’s point of view, points 7 and 13 of the New Economic Policy Action Plan should also be examined. According to this, the government’s goal is to support affordable housing, improve housing conditions and create a housing program for young people.
Within the framework of the new housing development capital program, domestic real estate funds can access up to HUF 30 billion in funds, and a total of more than HUF 100 billion can flow into the real estate market. 60% of the 100% Hungarian developments must be used for the following purposes:
- construction of a new apartment
- construction of new rental apartments
- college development
The program, which is available between March 1, 2024 and December 31, 2025, can give a significant boost to the construction industry and the real estate market. The goal of the support, from the government’s side, could be to promote the expected and hoped for 2025 economic growth of at least 3%. However, there is a fear that the artificial stimulation of the economy may drive up prices and therefore also inflation.
Prospects for the housing market
There is no doubt that the Hungarian real estate market – like many domestic assets – did not develop the way it did because of free market mechanisms, but because of political tools. Among the reasons for the drastic increase in prices, it is worth mentioning the previously experienced low interest rate environment and state subsidies, however, the scarcity of supply and the investor activity is also not negligible.
However, if interest rates remain high, loans may become more expensive due to the central bank base rate, and this may reduce the desire to buy. Thanks to the one-million-forint square meter price, even a one-and-a-half-room panel apartment costs almost HUF 40 million, which is almost double the prices five years ago.
In order for one’s own apartment to be feasible, average wages should increase by at least 30-40% in the coming years. This means that most people need a long-term loan to buy their own apartment, which is practically unattainable for people with lower incomes.
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