Real Estate Activity Down in the CEE Region

The real estate group Duna House says its international strategy has brought diversification benefits to the Group. Some of its markets are affected to varying degrees by interest rate increases and market expectations of such increases, thus dampening their combined impact.

Activity is down in all of the Group's markets, with a sharp decline in Poland. In troubled markets, the value proposition of intermediaries is strengthening, allowing the Group to increase its market share and compensate for negative market developments.

The strengthened market position is favorable for the Group in the long term, but market and macroeconomic developments may pose further challenges in the short term.

In Hungary, the residential real estate market witnessed a slowdown in activity in Q2 2022, however, the Group's Hungarian franchise real estate volumes grew by 18% on a year-on-year basis due to rising property prices and increasing market share. Own office volumes also had a strong quarter with a 46% year-on-year growth.

The Group’s intermediated loan volumes declined by 5%, while according to the total market

data in April the volume of non-subsidized mortgages with market conditions were down by 19% in April.

In Poland, interest rate hikes and restrictions on payment-to-income (PTI) ratio have had a negative impact on the loan and real estate market, resulting in a moderation in volumes following the strong growth in 2021. Franchise real estate volumes declined 7% y/y, while owned office real estate volumes fell 33%.

Loan intermediation volumes decreased by 1% year-on-year on a PLN basis, while the overall mortgage market fell 29% year-on-year in April and 37% year-on-year in May. In the current stressed market, the Group aims to further increase its market share and significantly expand its network of real estate brokers. During the quarter, the number of sales outlets increased by 7 to 104.

With the acquisition of Italian Hgroup, the Group's new market has become its largest loan intermediary. During the quarter, it brokered loans of HUF 137.4 billion, representing 57% of the Group's total volume. Growth was 6% on a euro basis, despite the mortgage market contracting

by 24% year-on-year in April and 17% year-on-year in May.

The real estate brokerage business generated commission revenue of HUF 173 million with an expanding network of 25 offices. Despite the difficulties in the mortgage market, the Italian subsidiaries managed to grow both on a year/year and on a quarter/quarter basis.