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Home market ʼeuphoric,ʼ says GKI

The GKI real estate index and the Budapest index rose in July both in year-on-year terms and compared to the previous quarter. The indices have reached their historic peaks, indicating that real estate market players have never been so optimistic.

Economic research institute GKI conducts quarterly surveys to assess the plans, intentions and prospects of real estate companies (developers, agents, consultants, and operators), as well as households, with respect to the property market. Respondents in the latest survey included 110 real estate firms and 1,122 construction companies. A household sample of 1,000 persons was representative with respect to sex, age, residence, and education level.

The Budapest and Hungarian real estate market indices synthesize expectations for the coming 12 months on the selected market segments of residential, office, retail and storage, thus providing an overall view of the prospects of the entire real estate sector.

Home market indices both at the nationwide and Budapest level (measuring the expectations of real estate companies and households with a single digit) have increased by 11 points. Both have reached historic peaks; in other words, home market participants are more optimistic now than before the crisis. Home market companies reported higher expectations for the coming 12 months in all three surveyed regions (West, Central and East Hungary).

Expectations of households regarding future home purchases and construction have substantially increased from the previous quarter. Compared to April, among those who were certain about a planned home purchase or construction, the increase was 25 percentage points, while among those who were uncertain about their plans there was a 43 percentage point increase. Households were similarly optimistic only back at the beginning of 2008, meaning that household expectations have reached a ten-year peak, GKI said.


The expected rise in the prices of used homes has slightly accelerated in Budapest from 3.3% to 4.5%, compared to the previous quarter. Expectations have not changed in non-Budapest areas. In East Hungary, they stood at 3%, and in West Hungary at 4-5%.

Concerning new home prices, a 3-6% rise is forecast for the coming 12 months.

The construction site index has dropped by 10 percentage points from the previous quarter, while the index in Budapest has fallen by 20 percentage points. These indices have reached two-year and four-year lows, respectively. A general 3-6% construction site price increase is expected for the coming 12 months.

Technology takes over brokering

In related news, a forecast released by real estate database házbank.hu indicates that real estate brokers could disappear from the market within five years. In a press release sent to the Budapest Business Journal, CEO Marcell Kövesdi said that most Hungarian real estate agencies concentrate on selling as soon as possible, instead of looking to sell at the highest price possible.

The number of real estate agencies has been stagnating at about 3,000 for several years. The number of transactions has not grown significantly, and neither have revenues. The market share of agencies has been continuously decreasing, which is not necessarily a general trend: in France, for example, agencies sell 80% of real estate put up for sale.

Kövesdi recommended concentrating on the preparation of qualified real estate brokers and developing IT support for the property sales process. Social media also has significant potential in building and maintaining trust between partners, he added.