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How are real estate prices developing in Hungary compared to German-speaking countries in Europe

The development of real estate prices, construction costs and operating costs in the DACH countries compared to Hungary over the past few years has been strongly influenced by Hungary catching up. If one assumes a lower base for real estate prices in 2010, the increase in prices for real estate in Hungary is enormous compared to the German-speaking countries.
 
One feels that prices for real estate in Hungary have increased by 10 to 20 percent per year in recent years, which is particularly explosive in Budapest and around Lake Balaton. But what does it really look like?
 

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The feeling is not wrong. On the contrary, the statistics underpin a stronger than perceived increase in construction costs and property prices in Hungary, especially in recent years. In addition to the tense raw materials situation, the increased demand for houses in Hungary from emigrants should also contribute significantly to the price increase. While we are only looking at the Hungarian average here, house price developments in the key areas around Lake Balaton and in Budapest are likely to have increased even more.
 
House price index in the EU risen sharply, Hungary is front runner
 
The house price index measures inflation in the residential real estate market. Any kind of purchase of both new and older residential units (houses, terraced houses, apartments, etc.) are taken into account. Only houses that have been sold, not self-built houses, are counted. The property component is also considered.

For the latest dataset from Eurostat, 2015 is set as the starting point with an index of 100. So let's face the year 2015 and look back 5 years to 2010 and forward to 2020 or 2023 and compare the costs. On average in the EU, prices rose by 26% from 2010 to 2020 and by another 21% in the last years from 2020 to 2023 alone. From 2010 to 2020, Hungary shows a price increase of 185%, with a slight price decrease in the period 2010-2013. From 2020 to 2023, it went up another whopping 94%. Overall, houses in Hungary have become more expensive by about 272% from 2010 to 2023, which means number 1 in Europe.¹

In 2023, the price increase had calmed somewhat due to higher general interest rates and the discontinuation of a large proportion of state mortgage interest rate caps in Hungary. In Germany, prices actually fell by almost 14% from 2022 to 2023 due to the interest rate trend and uncertainties in legislation. In 2024, the wild ride continues and we see significant price increases again in Hungary. In the meantime, we have already reached a price index of 290 in the Hungarian real estate market in the first quarter of 2024, which means a further increase of 17.5% compared to 2023.

Real estate prices compared 2010, 2020 and 2023, Index 100 in 2015
   
Price level for maintenance in Hungary significantly lower

If we compare the development of the costs of living in houses (water, electricity, gas and other fuels), we compare the individual countries of the EU and Switzerland and their deviations from the EU average on an indexed basis. The EU average is indexed at 100 in 2010, 2020 and 2023 and the respective upward or downward deviation of the individual countries compared to the average is evaluated.

While Switzerland was already well above the average in 2010 and doubled the average by 2020, Austria increased moderately from close to the average in 2010 to 2020. Germany remains second in the comparison at around 16% above the average in 2020. Hungary was almost half the EU average in both 2010 and 2020. The update for 2023 shows that Switzerland has moved even further away from the EU average in terms of ancillary costs since 2020, while Austria and Germany have increased marginally compared to the average. Costs in Hungary continued to rise from a low level towards the EU average, but still remain significantly below it.²

In Hungary, the difference to the EU average jumped by 6% from 2022 to 2023 alone. One reason for this can be found in the partial removal of subsidies on consumer prices for gas and electricity. The capped price is now only applied up to the average consumer consumption. Beyond that, consumers pay the market price, which is still lower than in German-speaking countries.

Housekeeping DACH countries and Hungary compared to the EU (Index 100) für die Jahre 2010, 2020 and 2023
 

Values in %	2010	2020	2023
Switzerland	166.4	201.6	212.1
Germany	116.4	116.1	117.3
Austria	99.0	112.3	114.9
Hungary	52.8	54.0	65.1

Please also see my separate article on additional costs for a house in Hungary.

Construction costs in Hungary compared to DACH countries exploded

When comparing construction costs, we again take the 2015 index position of 100 and look back 5 years to 2010 and forward 5 years to 2020 with an update for 2023.

The development of construction costs is somewhat more moderate compared to the development of house prices. In Switzerland, construction costs rose by just 1.6% between 2015 and 2020, which corresponds to stable low inflation in Switzerland. While construction costs rose by 17.9 % in Germany, we see a similar increase of 15.6 % in Austria over the same period. In Hungary, on the other hand, construction costs have risen by around 43.2%!

The latest data set is from 2023 as an update. Dramatic changes can already be seen here. While construction costs in Germany shot up by 42.4% within three years from 2020 to 2023, similar to the 38.6% increase in Austria, they exploded by an incredible 86.6% in Hungary!!!! From 2022 to 2023 alone, we recorded an increase of over 30% in Hungary.

This also explains the development of house prices in Hungary. The sharp rise in raw material costs over the last two years is definitely reflected in the sharp rise in house prices.³

The enormous increases in construction costs in Hungary must be borne in mind when new customers evaluate the now higher house prices for new builds. The difference in material costs compared to Germany is now marginal, which also has an impact on house prices.

Construction cost compared 2010, 2020 and 2023, Index 100 in 2015
   
It can be said that Hungary has experienced significant price explosions in recent years, particularly in areas that are in high demand. Meanwhile, buying a house in Hungary (especially on Lake Balaton) can break some budgets. There are certainly isolated cases in the market of very exaggerated price demands by sellers. But buying a house in Hungary has become much more expensive in general. The continuing advantage compared to the DACH region is the lower operating costs.  

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¹ Data in the summary and table: Eurostat 2022 https://ec.europa.eu/eurostat/cache/digpub/housing/bloc-2a.html?lang=en, Központi Statisztikai Hivatal, 2022, https://www.ksh.hu/s/kiadvanyok/lakaspiaci-arak-lakasarindex-2022-i-negyedev/index.html