Duna House Real Estate Deals Down by 1/5 in Hungary

Duna House Group’s closed Q3 with declining volumes compared to the record levels in the first two quarters, as an aggregate of three very different market factors. The performance of the Italian subsidiaries continues to be strong, only the significant seasonal impact of August lowered the volumes compared to H1 levels.

Volumes declined moderately and market share increased in Hungary, while the downturn intensified in Poland as lending requirements got stricter. Market share building remains the focus of the management: the increasingly complex loan requirements and more difficult real estate transactions elevate the role of the intermediary, while the number of creditworthy clients is – by a different degree in each market – decreasing.

In Hungary, the number of residential real estate transactions decreased by around 20% yoy in Q3 2022, according to the Group`s estimates. The Group's Hungarian franchise real estate volumes lowered by 9% on a year-on-year basis. Own office volumes stagnated with a 2% yearon-year growth. Group’s intermediated loan volumes declined by 18%, while the total housing loan market declined by 31% in July and 19% in August yoy.

In Poland, restrictions on payment-to-income (PTI) ratio have had a negative impact on the loan and real estate markets, resulting in a steep decline in volumes following the strong growth in 2021. Franchise real estate volumes lowered by 22% yoy, while owned office real estate volumes fell 33%. Loan intermediation volumes dropped by 57% yoy on a PLN basis, while the overall mortgage market fell 64% yoy in July and 69% yoy in August. Thereby, the Group's market share increased by around 50% in the mortgage market. In the current stressed market, the Group aims to further increase its market share and significantly expand its network of real estate brokers.

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 120.9 billion, representing 64% of the Group's total volume. Growth was 4% on euro basis. Decline compared to Q2 2022 follows usual seasonality: the holiday season of August causes monthly volume to drop to 40-42% of the levels seen in previous months. Analysts estimate the total mortgage market to have declined by 22.6% in 1-9m of 2022 compared to previous year, within which new loan disbursement is down by merely 1.7%. Loan volumes of the Group increased by 6.9% during the same period. The real estate brokerage business generated commission revenue of HUF 130 million with an expanding network of 39 offices. The euro exposure of the Italian entities provides significant stability to the Group.