Slightly increasing market prospects with moderate price drop are expected on the housing market

The prospects of companies operating on the housing market had been gradually worsening from the mid-2019 until April, which was followed by a moderate correction in July. According to the results of the joined survey of GKI and Masterplast, the prospects in the capital slightly worsened, however it was significantly improving in the countryside. The prices of the used flats in Budapest are expected to decrease with 3-4 percent in Budapest and with 2-3 percent in the countryside.

Hungarian housing market index of GKI-Masterplast, 2008-2020

Source: GKI surveys

GKI organizes a survey in every quarter in order to assess the plans, purposes and prospects of the companies dealing with real estates (developers, suppliers, counselors and operators). 106 companies dealing with real estates answered the survey. The analysis summarizes the results of the representative survey organized for the civilian population (sample of 1000 people). Since January 2020, the survey is carried out with the assistance of Masterplast Nyrt. The housing market index in the capital city and in Hungary summarizes the respondents’ expectations for the next year into a single figure.

In the current survey, the expectations for the next 12 months among real estate businesses in the capital have significantly worsened compared to the previous quarter. With the exception of the green area in Buda and the detached houses, the forecasts of the expected market situation have changed negatively, i.e. the market operators await further strengthening in oversupply. On the other hand, the expectations in the rural regions have increased.

The hopes of home purchase and construction fell sharply in April, corrected positively in July and then improved slightly further in November. In the survey of November 2020, 57,000 households stated that they would definitely buy or build a home in the next year, while 184,000 households expressed their intention to do so.

The metropolitan housing market index of GKI (which summarizes the expectations of the real estate companies and the population into a single number) decreased by 3 points on a quarterly basis and by 14 points on an annual basis. At the same time, the country-wide housing market index increased by almost 5 points on a quarterly basis and decreased by 11 points on an annual basis. It is uncommon that the capital and national index do not move in the same direction, and is usually indicating a high level of market uncertainty.

Expected changes in house prices in the next 12 months, November 2020

(Expressed as a percentage compared to the current prices)

Non-panel condominium flats              -4 (-5)
Budai – green area                                  -2 (-3)
Buda – other                                             -3 (-3)
City center of Pest                                    -5 (-4)
Pest – green area                                     -3 (-6)
Pest – other                                               -5 (-7)
Panel condominiums                               -5 (-5)
North Pest                                                  -6 (-5)
South Pest                                                  -6 (-8)
Buda                                                            -2 (-3)
Detached houses                                      -1 (-4,5)
Pest                                                              -2 (-6)
Buda                                                              0 (-3)
Total Budapest                                          -3,5 (-5)
Total Southern Hungary                          -3 (-12)
Total Western Hungary                           -2 (-7)

The results of the last survey are indicated in brackets.

Source: GKI surveys

In terms of expectations about the awaited development of house prices, in the present survey there was a slight majority in the capital expecting a decrease in sales prices (50%) against those expecting a stagnant price (47%). The proportion of those expecting a price increase is negligible. Based on the lesson learnt from the quantitative predictions, a 3-4-percent price increase is expected in the capital in the next 12 months. In the southern region, two out of three respondents are expecting a stagnation, while the forecast predicts an approx. 3-percent fall in prices. 72% percent of the participants expect stagnation, while 22% of them await a price drop. The overall forecast shows a potential price decline of only around 2%.

57% of the respondents expect decreasing housing rents in the next one year, 36% foresee stagnation and 7% of them await increase. The expectable reduction of fees is a lower than before, approx. 5%. Based on the answers received, an exceptional 8-percent increase is expected in Budapest.