Property Market: Stable Indices and Stagnating Prices

Based on the estimates of Duna House. a total of 34,000 transactions were concluded in Q4 2020, which reflects almost the same activity level as a year before. December 2020 was marginally stronger than the same month in the previous two years and brought more than 10,000 property sales in total.

The combined figures published by the property agency show that the market ended the year with a total of 131,460 transactions, which is a 12% decline compared to 2019. The decrease was caused by the social distancing measures introduced during the first wave of the Covid-19 pandemic: turnover in March, April and May was almost 40% below that of the previous year, bottoming out in April at almost -60%. From January 2021 onwards Duna House expects a brisk demand, partly on account of the government home subsidies that may result in an increase of transaction numbers.

According to forecasts in the Q4 barometer, the transaction volume will be in the 130,000-150,000 range in 2021. The Duna House property price index does not indicate any change in property prices. Its current values (193 points nominal and 133 points real) mean that the overall price level is stagnating. That said, the individual regions and property types show some variability: the prices of concrete block apartments have slightly decreased while those of brick and mortar homes increased and the prices in Western Hungary were on the rise while those in the East have decreased. Both the bargaining power and the time needed to sell a property showed some increase – and these are both hallmarks of a mature property
market.

As far as newly built residential properties are concerned, the market is still the briskest in Districts 9, 11 and 13 – this is where we see the most development projects, while the most expensive districts are invariably in Buda and downtown Budapest. In Q4 2020 there were already a total of seven districts with sq. m. prices above HUF 1 million, so the average sqm price of new build homes has exceeded HUF 1 million in Budapest. The least expensive new homes were offered in districts 23, 17 and 18.

Investors were more restrained compared to December 2019, both as sellers and buyers. In the capital, 36% of buyers were investors and only 4% indicated that they were selling a property they had bought for investment purposes. First-time buyers had a share of 23% both in Budapest and in the country. We expect their share to go up on account of the significant increase of home buying subsidies available, the barometer's executive summary points out.

As far as the property mortgage market is concerned, there were no major changes on a quarter/quarter basis. Transaction values exceeding HUF 20 million were most prevalent in Budapest (34%). In the country, mortgages of this magnitude were applied for by 4% and 11% of clients in the Eastern and in the Western part of the country, respectively. Most mortgage applications were for HUF 10-15 million both in the East and in the West.

Similarly to previous years, most applicants opted for a term of 20 years with a share of 42%, 52% and 38% in Budapest, in Western and in Eastern Hungary, respectively. In the East, the share of clients preferring a 25-year term rose to 22%. On an annual basis – going by the factual figures of the National Bank of Hungary for January to October and by the estimates of Duna House for November and December – the 2020 property mortgage market was HUF 4 billion stronger than in 2019, which represents an increase of almost 1%.