Decreasing Sales and Lending in the Real Estate Market

Both the number of sales and the volume of lending in the real estate market declined in the first quarter of this year, and this low market activity is also affecting the supply side of the housing market, Sándor Winkler, head of the National Bank of Hungary (MNB), said at an online press conference.

Based on the central bank's May housing market report, Sándor Winkler said there were 142,000 property sales in Hungary in 2022, a 19% drop from 2021. A larger year-on-year decline of 36% occurred mainly from the fourth quarter of last year, and low market activity persisted at the beginning of this year, with the number of property sales in the first quarter down 43% compared to the same period in 2022.

According to the MNB's head of department, the slowdown in demand is also due to the market's withdrawal due to the uncertain economic outlook, high price levels seen in previous years and declining lending. 

On the latter, he said, the volume of home loans extended fell by 69% year-on-year in March this year. Within this, the largest decline of more than 80% was recorded in housing loans for the purchase and construction of new housing. The high base caused by the growth loan scheme NHP Green Home program played a role in this, he noted. 

He said that falling demand had affected housing prices: according to the MNB's house price index, house prices fell by 3.6% on average nationwide in the fourth quarter of last year. In Budapest, house prices fell by 1.1%, in rural towns by 2.9% and in villages by 6.6%. Based on transaction data from real estate agents, they see that prices have already risen slightly on average in the first quarter of this year, but in Budapest the data still show a 1% decline. The slight decline in the housing market has eased the overvaluation of house prices relative to economic fundamentals, he said. 

Sándor Winkler stressed that the low market activity was also affecting the supply side of the housing market. The construction industry and housing developments are increasingly being held back by a lack of demand.

Last year, some 20,500 new housing units were delivered in the country, but this is only a very slight increase compared to 2021.