Rising interest rates curb demand for homes
Demand for homes in Hungary has "fallen significantly," mainly because of the increased cost of taking out a mortgage as interest rates rise amid climbing inflation, according to an analysis by listings site ingatlan.com.
Interest among potential homebuyers in the first quarter was even lower than in Q1 2020, during the first days of the pandemic, ingatlan.com said.
The analysis also augurs a gap between the pace of price increases for new and resale homes.
Prices for new homes in the capital now stand close to HUF 1.1 million per sqm, up 21% from a year earlier, while resale home prices in Budapest have risen just 17% to HUF 873,000 per sqm. Ingatlan.com analyst László Balogh said new home prices are being impacted by factors independent of demand, such as the labor market squeeze and higher building materials prices.
The direction of the market for new homes could be decided by the willingness of buyers to pay a price that reflects those factors, and if that demand is lacking, residential projects could be shelved, he added.
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