Real Estate Prices in 2023 – What Characterizes the Market?
The domestic real estate market is characterized by a wide selection and subdued demand. While property prices in Hungary have increased, the European Union has experienced a general decline. Data from the European Union, Hungary’s Central Statistical Office (KSH), and the Hungarian National Bank (MNB) provide insights into property prices, rental costs, and transaction volumes.
Property Prices in the EU
In Q4 2022, real estate prices in the EU decreased by 1.4%, followed by a further decline of 0.7% in Q1 2023.
Looking back a year, property prices saw a slight increase of 0.8% compared to Q1 2022.
Over a longer timeline, property prices in the EU have shown fluctuations since 2010. A sharp decline between Q2 2011 and Q1 2013 was followed by relative stability in 2013 and 2014.
After a rapid increase in early 2015, property prices grew faster than rental prices until Q2 2022.
In Q3 2022, both property and rental prices rose by 0.7%.
By Q4 2022, property prices began to decline, while rental costs continued to rise.
Overall, from 2010 to Q1 2023, property prices in the EU increased by 46%.
The growth varied across member states:
Notable increases: Estonia (200%), Hungary (180%), Lithuania (146%), Latvia (132%), Luxembourg (126%), Czech Republic (123%), and Austria (122%).
Decreases: Greece (14%), Italy (9%), and Cyprus (2%).
Rental Costs in the EU
EU rental prices increased by 0.9% in the first quarter of 2023 compared to the last quarter of 2022.
Compared to the first quarter of 2022, there was a 2.9% increase over the course of one year.
EU rental prices have shown consistent growth since 2010, continuing up to the first quarter of 2023.
Overall, from 2010 to the first quarter of 2023, rental prices increased by 20% across the EU. However, variations exist among individual member states.
The most significant increases in rental prices occurred in Estonia (212%) and Lithuania (165%). Conversely, Greece experienced a decline of 22%.
EU – Changes in the Number of Property Sales
At the EU level, the number of property sales decreased in 2022, following growth in 2021.
The largest declines in transaction numbers in 2022 were observed in Denmark (31.6%), Finland (16.6%), the Netherlands (16.2%), and Luxembourg (15.1%).
The highest increase was recorded in Cyprus, with a growth of 27.4%. Smaller increases were also observed in Ireland (7.7%) and Spain (6.0%).
Property Prices 2023 – Hungary
According to data from the Hungarian Central Statistical Office (KSH), the property price index in the first quarter of 2023 was 264.7%, taking 2015 data as 100%.
Within this, new-build properties showed a 293% increase, while second-hand properties rose by 260%.
Source: KSH, 2023
In the first quarter of 2023, domestic property prices increased by 2.5% compared to the previous quarter. Within this, the price of second-hand properties rose by only 1.9%, while new-build properties saw a 6% increase.
On an annual basis, the overall price increase was 9.6%. Specifically, new-build properties were 13.6% more expensive, while second-hand properties were 9% more expensive compared to 2022.
Nationwide Decline in the Number of Home Sales
The demand in the real estate market has nearly halved on an annual basis. In the first quarter of 2023, compared to the same period of the previous year, a 47% drop in demand was observed in Budapest and a 45% drop in rural areas.
During the first quarter of this year, a total of 14,032 home sales were recorded, a sharp decline compared to the first quarter of 2022, when 41,049 sales were registered.
The decrease in the number of sales has been ongoing since the first quarter of 2022. What began as a slight 4% drop escalated to a 31% decline by the first quarter of 2023. With slight variations, the sales of second-hand properties fell more significantly than new-build properties in Q1 2023.
Source: KSH, 2023
In the first quarter of 2023, the decline in housing market turnover had the least impact on the real estate market in the capital city. The biggest losses were recorded in county seats, with a 44% drop, followed by towns with a 36% decrease, and villages with a 30% decrease.
Source: KSH, 2023
Sales of New and Used Apartments in Q1 2023 – Strengthening Bargaining Position
In the first quarter of 2023, 2,300 newly built properties were sold. The average price nationwide was HUF 57 million, similar to the previous period. Budapest stood out, with an average price of HUF 68.5 million, representing a HUF 1.4 million increase compared to the previous period.
Square meter prices remained unchanged from the previous period. In Budapest, the average price per square meter was HUF 1.2 million, while the national average was HUF 965,000.
For used properties, the average price of an apartment in Budapest was HUF 48.3 million in Q1 2023, a decrease of HUF 600,000 compared to 2022. However, the average price per square meter rose to HUF 885,000, showing a 5.1% increase.
Within this category, family house prices in the capital decreased by 5.9%, while the price of condominium properties increased by 5.3%.
In the case of used properties outside Budapest, the average price per square meter rose to HUF 438,000, up from HUF 409,000 in 2022. However, overall housing prices showed a decline of between 0.5% and 14%, depending on the region. An exception to this trend was the Balaton agglomeration, where property prices increased in both 2022 and 2023.
It is notable that rural areas eligible for the “Village CSOK” housing subsidy experienced the smallest decline in sales.
The decline in the number of transactions, coupled with falling prices, has strengthened bargaining positions. The ongoing decrease in demand and sales is expected to further enhance negotiation opportunities in the market.
Rental Prices in Hungary
According to the latest data from the Hungarian Central Statistical Office (KSH), rental prices for properties continue to rise. Nationwide, there was a 1.9% increase in July compared to the previous month.
Since 2015, rental prices have increased by 92% nationwide and by 84% in the capital.
Compared to 2022, rental prices for properties intended for lease rose by 14% in Budapest and 13% nationwide.
Source: KSH, 2023
The number of rental properties available has declined compared to the previous year. Over half (56%) of properties for rent are located in Budapest. In the capital, the average rental property size is 55 m², compared to 58 m² in county cities and 67 m² in smaller settlements.
At the start of 2023, 92% of rental properties were apartments in residential buildings, while 8% were detached houses.
In Budapest, the average rent was 230,000 HUF in 2023. The most expensive districts were District II and District V, where the average rent reached 350,000 HUF. The most affordable district in the capital was District XXIII, with an average rent of 150,000 HUF as of July 2023.
In the countryside, the average rent in county capitals was 130,000 HUF, though there were significant variations. Veszprém was the most expensive, with an average rent of 168,000 HUF, while Salgótarján was the most affordable at 93,000 HUF per month.
Foreign Buyers in Hungary
In 2022, the share of foreign investors in the real estate market increased. This rise was noticeable in the second quarter and remained at an elevated level by the end of the year. Foreign investors accounted for 6.4% of total purchases nationwide.
Nearly three-quarters of foreign buyers focused on properties outside Budapest. The largest growth was observed in the South Transdanubian and West Transdanubian regions, where the share of purchases reached approximately 12% of all transactions by the end of 2022.
In Budapest, foreign investors were primarily attracted to inner districts, where their investments accounted for 17.7% of total transactions by the end of 2022.
Investor Activity in the Real Estate Market
In Budapest, the number of investment-related property purchases and sales of previously investment-owned properties increased in the last quarter of 2022. However, this upward trend declined in the first quarter of 2023. During this period, 42% of buyers and 33% of sellers were investors, resulting in a return to the September 2022 levels for investor activity.
Outside the capital, investment-driven purchases accounted for 32% of all transactions, while the sale of properties previously bought for investment made up 24% of sales. These figures suggest a potential for continued growth in investment activity.
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