Hungary's home prices jumped sharply this year, with nationwide growth nearing 24% and Budapest close to 30%, and the government's new home loan scheme will push up prices further, according to the quarterly Housing report of the National Bank released on November 19.

The MNB highlighted that the housing market is significantly overvalued, with prices standing nearly 19% above levels justified by fundamentals. Its forecast model, which incorporates September data, projects robust 6-7% quarterly price increases in Q3 and Q4 as well. If realised, annual price growth would reach 29%, a rate last observed in Q4 2000.

Recent figures indicate that Hungary's housing price surge is continuing, placing the country among the fastest-rising markets in the EU. Eurostat data show that home prices in Hungary have climbed 234% since 2010, the steepest increase in the bloc and more than four times the EU average of 55%.

Demand surged from August due to the launch of Home Start subsidised mortgage programme, as easier borrowing conditions widened access to home loans. The programme offers a 3% fixed rate for the duration of the loans, which is more than half of the current market rate.

The reason why prices in Budapest grew at a slower pace than the national average is that the programme's price caps have limited further rises for some properties. But supply isn't keeping up: fewer new homes are being completed, even though building permits are rising. As a result, further price increases are likely, the MNB said.

Beyond the subsidised loan scheme, demand was boosted by other factors such as rising real wages, growing household net income.

Meanwhile, the level of new housing construction in Hungary remains the lowest among EU member states. The MNB forecasts that the number of newly delivered homes will decline by 7% this year compared with 2024, with 12,400 completions expected in total.

The government is working to help boost the supply side of the market with state-backed programmes and relaxed administrative barriers to speed up construction. State-owned National Capital Holding (NTH) has provided HUF160bn capital to ten property fund managers to invest in new projects.

To date, developers have announced more than 25,000 projects nationwide that meet the eligibility criteria. Eligible properties are capped at HUF100mn (€260,000) for flats and HUF150mn for houses, and the maximum per square metre price is set at HUF1.5mn.

The scheme could channel HUF1 trillion to the local residential property market, resulting in the construction of as many as 30,000 homes, rental homes and dormitories over six years.

The number of newly started condominium units more than doubled nationwide and more than tripled in Budapest in H1. However, the number of completions will remain low over the next year, as two to three years may pass before new projects influenced by the programme are completed.

The report notes that the Home Start programme has clearly influenced the rental market, causing rents to level off in Budapest and decline in areas outside the capital.

On the investment side, the MNB points out that more investors are now active on the supply side, while declining rental yields (under 5% in Budapest and under 7% in rural areas) are reducing the bargaining power of buyers.

Lending activity remained strong in the first six months; the volume of newly issued housing loans rose by 26% y/y to HUF808bn and are on track to break records in 2025 and 2026. According to the latest data, around 15,000 loan applications for HUF400bn  have been submitted so far under the Home Start loan programme.