Price explosion in Budapest? What the government’s new plans mean for the housing market
Eingang im Denkmalgeschützten Haus in Budapest im 13. Bezirk - Szent Istvan Körút
Entrance to the listed house in Budapest's 13th district - Szent Istvan Körút

Real estate prices in Hungary are currently rising more than twice as fast as inflation. According to the real estate price index from ingatlan.com, real estate prices rose by an average of 6.7 percent in September compared to the previous year. In Budapest, the price increase was as high as 9.1 percent. This trend could increase significantly in 2025.

Particularly strong price increase in Budapest

The price increase is particularly strong in Budapest. The average price per square meter in the capital is already 1.07 million forints (HUF). Pest city center is the most expensive, with an average price per square meter of HUF 1.73 million. In comparison, the cheapest district of Budapest, Pesterzsébet, has an average price of HUF 714,000 per square meter.

Pension funds could fuel the market

The reason for the expected price explosion is that the Hungarian government plans to allow pension funds to invest up to 30% of their assets in real estate from 2025. The aim of this measure is to increase pension fund returns and stimulate the Hungarian real estate market. As a result, money amounting to several trillion forints (approx. 10 billion euros) could flow from pension fund savings and government securities into the real estate market. This influx of money, which corresponds to a third to a quarter of the usual annual housing market turnover, could drive up prices further, especially in Budapest and the major cities. László Balogh, the leading economic expert at ingatlan.com, expects prices to rise by at least 10-15 percent.

However, experts fear that this could lead to an overheating of the market and a sharp rise in real estate prices. Critics also point out that this measure could jeopardize the retirement provisions of Hungarians, as investments in real estate are associated with a higher risk than investments in government bonds.

Source: hvg.hu

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