Fundamental turn on the Hungarian property market: 10 pc price drop

Following last year’s dramatic price increase, Hungary’s property market prices are projected to normalise in 2023. Since demand has been falling for months, buyers can negotiate down the prices by almost 10 percent. Experts say if interest rates remain high or the government does not introduce new allocations, this trend will persist.

The reasons behind moderate demand are the high inflation and interest rates as well as the modification of Hungary’s utility price scheme. As a result, in end-2022, real estate agencies experienced a significant price surge. In a year-long period, the price hike reached 16 percent, but buyers waited until the last months to go through with the transactions.

Supply exceeds demand mostly in the case of huge, energetically not modernised properties in need of renovation. However, most sellers do not want to give away their real estate for a lower-than-expected price, so they wait for better days. As a result, the number of transactions dropped significantly compared to 2022.

Béla Tóth, an associate of the Debrecen-based DebOtthon real estate agency, said that he expects growth in transaction numbers. He believes that the trend will persist unless the government’s financial support policies change and interest rates in the property market will start to fall. In that regard, today’s central bank decision gave some reason for hope. Looking at different Hungarian municipalities, prices are particularly high in Debrecen; a square metre exceeds HUF 700,000 (EUR 1,852) on average. Debrecen is considered attractive because BMW and Catl will build new plants in the city, and Debrecen University counts thousands of foreign and Hungarian students. Tóth added that owners are supposed to sell their properties for 10 percent less, but only a few do.