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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 has risen sharply, Hungary is the front runner compared to German-speaking countries
 
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 2022 and compare the costs. On average in the EU, prices rose by 26% from 2010 to 2020 and by another 15% in the last two years from 2020 to 2022 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 the first quarter of 2022, it went up another whopping 56%. Overall, houses in Hungary have become more expensive by about 240% from 2010 to 2022, which means number 1 in Europe.¹

Real estate prices compared 2010, 2020 and Q1 2022, Index 100 in 2015
   
Price level for household maintenance in Hungary significantly lower than in DACH countries

If we compare the development of costs for living in houses (water, electricity, gas and other fuels), then we index the individual countries of the EU and Switzerland and compare their deviations from the EU average. The EU average is indexed at 100 in both 2010 and 2020 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 has increased moderately from close to the average in 2010. Germany remains second in comparison with about 16% above the average. Hungary was almost half the EU average in both 2010 and 2020. The latest developments in energy prices in the DACH countries with moderate increases in Hungary should widen the gap even further.²

Housekeeping DACH countries and Hungary compared to the EU (Index 100) für die Jahre 2010 und 2020 
 
Construction costs in Hungary compared to DACH countries exploded

When comparing the construction costs, we again take the index position 2015 with 100 and look back 5 years to 2010 and 5 years forward to 2020

The development of construction costs is somewhat more moderate compared to the development of house prices. Across the EU, construction costs for new houses increased by 17% from 2010 to 2020. What is unexpected is that construction costs in Switzerland only rose marginally at 3.8%. Both in Germany and in Austria we are rounded at almost 20%. In Hungary, on the other hand, construction costs have increased by about 54%! 

This should also explain partially the development of house prices. The raw material costs, which have risen sharply in the last two years, are also reflected in the development of construction costs here.³

Construction cost compared 2010 und 2020, 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