In the first quarter of 2024, Hungary witnessed a notable decline in housing completions, with a total of 2,704 apartments delivered, representing a 2.7 percent decrease compared to the same period the previous year, according to the Central Statistical Office (KSH).

In Budapest, the capital, 843 new units were completed, a decrease of 7.4 percent from the previous year.

In regional municipalities, the decline was even steeper, with a 33 percent reduction, where completed units amounted to less than half of those in Budapest.

Conversely, smaller towns reported an increase in completions, with a 29 percent rise in non-county seats and a 2.5 percent increase in villages.

The concentration of new housing construction remains strongly centered in Budapest, where over two-thirds of new apartments were built in three districts: 277 in District IX, 172 in District XI, and 130 in District XIX.

Most regions in Hungary saw a reduction in housing completions compared to the previous year, particularly in the Central Transdanubia, Southern Great Plain, and Northern Great Plain regions.

However, a notable 21 percent increase was recorded in the Pest region.

The Western Transdanubia region experienced a 43 percent growth in new housing, with significant contributions from various areas, while the Southern Transdanubia's increase was largely limited to the Balaton region, where the number of completions tripled.

The ratio of apartments built by private individuals decreased from 38 percent to 34 percent, while developments by companies increased from 61 percent to 66 percent compared to the previous year.

In terms of building types, 50 percent of the completed apartments were in family houses, 41 percent in multi-storey buildings, and 4.5 percent in residential parks.

The average floor area of newly completed apartments decreased by 1.9 square meters, bringing the average to 94.6 square meters, with city apartments averaging 75 square meters.

The proportion of apartments built for sale rose to 65 percent, while those intended for personal use accounted for 32 percent, indicating a shift of about five percentage points towards development for the market.

Nationwide, the number of building permits and simple notifications indicated that 5,651 apartments were planned, a 25 percent increase compared to the previous year, predominantly driven by several large-scale investments in Budapest.

In the capital, a total of 2,674 permits were granted—nearly three times the number from a year earlier.

Approximately 75 percent of these approved projects will occur in four districts, with District XI alone receiving roughly 1,000 permits, followed by Districts X, XIII, and XXI, which cumulatively added another 1,000.

In contrast, all categories of settlements outside the capital saw declines in the number of building permits compared to the first quarter of 2024, with county seat municipalities dropping by 17 percent, other towns by 25 percent, and villages by 6.5 percent.

The decline in permits in county seats was balanced somewhat by a significant number issued in Szeged.

Only the regions of Central Transdanubia and Southern Great Plain outside Budapest saw increases in permits, while other areas experienced decreases, particularly in the Northern Great Plain, where the number of new initiatives plummeted by 71 percent.

In approximately 30 percent of cases, developers opted for simplified notification options.

Based on the newly granted building permits, a total of 1,846 residential buildings were planned nationwide, representing a 3.3 percent decrease.

The number of planned non-residential buildings was 649, reflecting a 24 percent decline year-over-year.

Despite a drop in the number of completed apartments compared to last year's low base, Daniel Molnar, chief analyst at MGFÜ, noted a positive trend with a nearly 25 percent increase in issued building permits, hinting at a gradual uptick in future residential construction.

Regional disparities in this trend were evident, and a sustained increase in demand for housing is expected, driven by improving income levels and substantial interest payments from retail government bonds.

Data indicated that housing market transactions in the first quarter rose by 8.8 percent from the previous year, aided by improved financial conditions.

The average price per square meter for newly built residential properties in Budapest reached nearly 1.6 million HUF, up from 1.34 million HUF a year earlier.

In regional capitals, the average square meter price was set at 1 million HUF, while smaller towns averaged 990,000 HUF.

The average price in villages slightly decreased from 850,000 HUF to 835,000 HUF compared to last year.

As Hungary continues to grapple with a housing crisis similar to that seen across Europe, the increasing age and deterioration of housing stock pose significant challenges.

Rising real estate prices outpace real income growth, necessitating financing through loans.

However, high interest rates have led to a reluctance among the population to take on housing loans, causing a stymied housing market.

Concerns about the sustainability of the housing market have led to various proposals for addressing the funding issues underlying housing development and renovation.

The sector's dynamics, facing unique pressures from inflation and construction cost hikes, are central to ongoing discussions among stakeholders.