Fewer Residential Sales Expected in Hungary This Year

Market players expect 90-120,000 fewer residential property sales in 2023 than last year, with the outlook mainly determined by lending rates, changes in utility bills and remaining state subsidies.

As the property agency Duna House told the state news agency MTI on Monday, it estimates that 6,474 sales were made on the real estate market in December 2022, down 19% from November and 43% from the same period last year. This means that the residential property market closed in 2022 with 125,171 sales, a 22% drop compared to 2021.

According to Duna House, the market is not expected to pick up in 2023, with 90-110,000 homes expected to be sold. 

Hungarian data of the group's international financial brand, the credit intermediary Credipass, suggests that the credit market in December 2022 saw HUF 55 billion of mortgage loans, a 48% drop compared to a year earlier and an 8% drop compared to the previous month. On an annual basis, the Hungarian population took out HUF 1,217 billion in housing loans, a 6.6% decline compared to the record year of 2021, according to the Hungarian National Bank (MNB) and Credipass estimates.

According to a statement from Duna House, the year-end announcement sends a positive message of remaining state support, providing certainty and predictability to the credit market.

Chief economic expert of the real estate site ingatlan.com, László Balogh said in a statement sent to MTI on Monday that this year there could be a maximum of 100-120,000 sales, which is 20% below last year's level. The key question will be whether sellers can reach buyers, which will require a flexible and realistic pricing strategy. In contrast to the double-digit price increases of recent years, prices could rise much more slowly in 2023, by 4-5% on average.

They also pointed out that inflation and economic uncertainties have also pushed average mortgage rates to around 9-10% by the end of 2022, which has significantly dampened the appetite for house buying. The outlook is that lending rates could remain at these levels in 2023, which could lead to sluggish demand. This year, housing loan rates are only likely to start falling as inflation moderates, which is why inflation developments will be important for the housing market.

He recalled that under the decision taken at the end of 2022, gas tariffs will not change above average consumption until the end of April this year. If gas bills remain at a manageable level, there will not be the housing sales surge in 2023 under the impact of the overheads that was previously expected.