Real Estate Price Increase Expectations Slightly Down

The expectations of real estate companies for price increases have weakened slightly, with half of respondents in the capital and two-thirds in rural areas expecting price rises; the price of second-hand housing may rise by 6% in the next year, while the price of new housing by almost 10%, according to a joint survey by GKI Economic Research Co. and Masterplast.

While the demand side of the housing market is being boosted by rising incomes, state subsidies and soft loans, market players face a number of risks. In addition to accelerating inflation and rising interest rates, there is the uncertainty caused by the Russian invasion of Ukraine. The latter has a fundamentally negative impact according to 47% of real estate companies, a positive impact according to 14% and no significant impact according to 39%.

According to the survey results, the housing market overhang is expected to persist in all regions for the next year. Expectations for the next 12 months among real estate firms in the capital are little changed from a quarter earlier. A notable improvement was observed in the outlook for the market for green belt properties in Pest and for the market for prefabricated building apartments on the Buda side of the capital.

In Eastern Hungary, the picture is mixed, with a slightly improving outlook for prefabricated apartments and a somewhat worsening outlook for brick apartments. In Western Hungary, expectations for detached houses improved slightly, while there was no significant change in the other segments.

GKI-Masterplast's housing market index for the capital, which condenses the expectations of real estate companies and residents into a single figure, was essentially unchanged on a quarterly basis, and showed a 2-point increase on an annual basis. The index for the country as a whole shows an increase of two points on a quarterly basis and one point on an annual basis.

Almost half of the real estate companies surveyed expect prices of second-hand dwellings to rise in Budapest and more than half in rural areas, with an increase of 4-5% in Budapest and Western Hungary and around 8% in Eastern Hungary.

Two thirds of the respondents expect prices of new dwellings to rise, none of them expect prices to fall. Here, prices are being pushed up not only by rising construction costs but also by tight supply. A price rise of almost 10% is expected in this area in the near future.

In the rental market, two-thirds of those expecting prices to rise, while hardly anyone expects them to fall. A rise of around 7% is likely over the next year.

    The GKI organises a quarterly survey to gauge the outlook of real estate firms, with 100 firms responding to the June survey. The analysis also includes the results of a representative residential survey. Since January 2020, the survey has been conducted with the support of Masterplast Plc.