A growing structural problem is emerging in Budapest's new-build market. More homes are coming onto the market, but increasingly they are being built at prices most buyers cannot afford.
According to Zenga.hu, the number of new homes advertised across Hungary has increased by 6% over the past year, including a 25% rise in Budapest. However, demand for new homes nationally fell 47%.
Zenga says deteriorating affordability following last year's significant price increases is one reason for the fall in demand.
The problem is particularly acute in central Budapest
“In the city centre, you're now looking at a starting price of around HUF 2 million per square metre for many new developments, all the way up to HUF 4 million at the premium end,” says Alex Markus, Chief Executive, City-Lets Ltd.
The vast majority of buyers are being locked out of Budapest city centre's new-apartment market, with house hunters now needing at least HUF 120 million to afford the majority of new units being built.
The affordability problem extends beyond central Budapest. Across Hungary, the majority of buyers have around HUF 60 million to spend.
Zenga's figures illustrate the gap. HUF 50 million currently buys an average of just 27 square metres of new-build property in Budapest, while new homes in the capital typically cost 25–30% more than used properties of a similar size.
“This is forcing many buyers to look much further out, or turn to panel apartments because that's what their budget allows,” says Markus.
The underlying problem is cost
Driven by soaring development expenses, builders are increasingly delivering high-end, premium apartments just to make their projects financially viable. This has driven up the share of HUF 120 million-plus stock while squeezing the entry-level market.
At the same time, more new homes could reach the market in 2027 as developments launched in response to stronger demand from late 2024 move towards completion.
But increasing the number of new apartments does not solve the problem if those apartments remain beyond the budgets of most buyers.
“With Hungary already facing a housing shortage, this affordability gap could further slow the delivery of new apartments,” says Markus.
“The gap has real consequences for supply. Even though apartment approvals are picking up, this mismatch between prices and budgets is likely to hold back pre-sales and delay new projects.
“Unless construction costs fall, designs change or policies shift, the disconnect between what's being built and what buyers can afford will remain a major challenge.”