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The Hungarian Housing Market in 2025: Recovery, Challenges, and Prospects 

The Hungarian housing market is set for a strong recovery in 2025, driven by rising wages, favourable policies, and government measures aimed at improving affordability, offering great opportunities for investors and homebuyers alike.

The Hungarian Housing Market in 2025: Recovery, Challenges, and Prospects 

A Strong Comeback on the Horizon
The Hungarian housing market appears poised for a robust recovery in 2025 following a period of stagnation. Key drivers include increasing real wages, a reduction in the central bank’s base rate, and improving credit market conditions. Additionally, pre-election government measures are creating a favourable environment for market growth. Initiatives such as extending the discounted 5% VAT (instead of 27%) on newly built apartments and overhauling rental rules are gaining traction. However, many policies prioritize boosting demand without addressing supply shortages, raising concerns about long-term affordability.  

New measures like restrictions on Airbnb and youth-focused housing programs are also emerging, though their details remain vague for the moment. Notably, spokespeople for the government highlighted a housing crisis in Budapest and other major cities, exacerbated by fluctuating house prices and stagnating wages. House price indices reflect a post-pandemic dip, with a gradual recovery in 2023, and increasing price points throughout 2024. The amount of rental fees has followed a similar trajectory, underscoring the affordability challenge.  

Focus on Rent Control and Housing Benefits
Historically overshadowed by homeownership policies, the rental market is now receiving greater attention. A key proposal involves extending housing cafeteria benefits to include rent payments, which could significantly enhance support for renters. Concurrently, discussions between the government and banks about capping housing loan interest rates are shaping lending practices and potentially influencing demand.  

Budget constraints, however, necessitate cost-effective solutions. Proposals like using SZÉP cards and voluntary pension savings for housing align with this approach. Large-scale improvements may depend on the state of public finances, potentially delaying ambitious reforms.  

Market Trends and Affordability
Affordability has become a focal point in government communications, marking a shift in housing policy rhetoric. With average square meter prices in Budapest exceeding HUF 1.07 million and rents consuming half of the average salary, the housing affordability crisis is undeniable.   

Looking ahead, housing prices are expected to rise, with forecasts predicting a 10-20% increase in 2025. The inflow of capital from investors exiting inflation-tracking government securities is likely to be the main drive behind these trends. This influx, combined with government subsidies and investor activity, may lead to overheating in the market, further straining affordability.  

Insights from the ingatlan.com Conference 2024
László Balogh, the leading economic expert at ingatlan.com, has likened the housing market to a phoenix, rising from setbacks to regain momentum. However, he cautions that the market’s recovery is fraught with "time bombs," such as the Airbnb ban on Budapest's District 6 and some other uncertainties surrounding the new housing subsidies.  

Balogh emphasizes the importance of adapting to current circumstances rather than relying on past trends, given the disruptions caused by COVID-19, inflation, and geopolitical events. Demand in the housing market has been inconsistent, with periodic surges followed by slowdowns. While rising house prices and stable interest rates have prompted hesitant buyers to act, sustainability remains uncertain.  

The New Economic Action Plan and Its Implications
The government’s 21-point New Economic Action Plan introduces bold measures to stimulate the housing market. Key pillars include affordable housing in Budapest, employer-provided housing subsidies, and regulatory changes in the rental market. Notably, the return of the apartment cafeteria program could increase purchasing power by allowing employers to support employees’ housing costs with favourable taxation.  

However, some measures, like stricter Airbnb regulations and rent controls, aim to cool investor activity and prevent rapid price increases that could undermine private buyers’ access to housing. For instance, in Budapest, the flat rate tax for short-term rentals is set to quadruple, and no new permits will be issued until 2026. These changes are already impacting market prices in districts like Terézváros, where short-term rentals will be banned by 2026.  

Future Outlook: Risks and Opportunities  
While the housing market is set for a strong rebound, risks remain. The government’s balancing act between stimulating demand and curbing speculative activity will be crucial. Measures targeting young people, such as affordable sublet programs and employer-backed subsidies, could alleviate affordability pressures.  

However, the influx of capital from government bonds into real estate may fuel price spikes, particularly in urban areas. 

As 2025 approaches, stakeholders in Hungary’s housing market must navigate a landscape shaped by economic recovery, evolving policies, and persistent affordability challenges. With prices fluctuating and housing policies in transition, finding the right apartment can feel uncertain. For investors and homebuyers, staying informed about policy changes and market trends will be crucial to capitalizing on emerging opportunities.

In this dynamic environment, Metropolitan Homes is here to offer expert advice and guide you every step of the way. If you're looking for a property in 2025, don’t hesitate to reach out to us—we’re ready to help you find your perfect home or ideal property investment in Budapest. 


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