Hungary and European Union's housing market

The European Union's residential real estate market is a complex and dynamic landscape, influenced by various economic, social, and political factors. In recent years, the market has experienced significant fluctuations, with certain regions emerging as particularly attractive for investment and residency. Among these, Hungary stands out due to its unique advantages. This article delves into the current state of the EU's residential real estate market, highlights Hungary's competitive edge, and identifies the top five residential real estate markets in the EU, supported by statistical analyses.

European Union's housing market

Overview of the EU Residential Real Estate Market

The European Union's housing market has seen notable changes over the past decade. From 2015 to 2024, housing prices in the EU surged by 48%, while rents increased by 13%, making housing costs a significant concern, especially in regional capitals and smaller cities. The highest increases in house prices were observed in Hungary (196%), Lithuania (114%), and Czechia (112%).

These trends underscore the growing demand and, in some cases, the limited supply of housing across the continent.

In the second quarter of 2024, the Eurozone experienced a 1.3% rise in house prices compared to the same period in the previous year, marking the first increase after four consecutive quarters of decline. This uptick is attributed to falling mortgage rates, a resilient labor market, rising disposable incomes, and wage growth outpacing inflation. Countries such as the Netherlands, Spain, Portugal, and Croatia saw significant annual increases in property prices during this period.

However, the housing crisis remains a pressing issue in many EU countries. In December 2024, mayors of ten major European cities, including Barcelona, Rome, Amsterdam, and Paris, urged the EU to address the housing crisis affecting over 13 million citizens. They highlighted the increasing difficulty for various social groups to access adequate housing and a rise in homelessness.

EU real estate market

Advantages of the Hungarian Real Estate Market

Hungary's real estate market offers several unique advantages that make it attractive to investors and residents alike:

1. Affordable Property Prices: Despite the significant increase in property prices over the past decade, Hungary still offers relatively affordable real estate options compared to many Western European countries. For instance, expatriates have reported purchasing houses in Hungary for as low as €1,986, with minimal annual taxes and subsidized utilities.

   
   

2. Favorable Investment Programs: Hungary has introduced initiatives like the Guest Investor Program, allowing foreign investors to obtain a 10-year residence permit by contributing at least €250,000. Such programs have attracted numerous investors seeking residency and investment opportunities within the EU.

   
   

3. Economic Initiatives to Boost Housing: The Hungarian government has proposed measures to stimulate the housing market, such as allowing private pension savings to be used tax-free for housing purposes. This initiative aims to boost the economy and the housing sector ahead of the 2026 parliamentary election.

   
   

4. Low Taxation: Hungary offers a favorable tax environment with no capital tax, and property tax is 4%. Additionally, local business tax is very low compare to rest of EU, and there is no net wealth tax.

   
   

5. Strategic Location and Infrastructure: Budapest, the capital city, is a significant economic hub, classified as a Beta+ world city. It is directly connected to neighboring countries via motorways and has a well-developed transport infrastructure, enhancing its appeal for business and tourism.

   
   

   

   Budapest Residential Market

   
   

Top 5 Residential Real Estate Markets in the EU

Based on recent trends and statistical analyses, the following are the top five residential real estate markets in the EU:

1. Hungary: With a staggering 196% increase in house prices from 2015 to 2024, Hungary's real estate market has shown remarkable growth. The combination of affordable property prices, favorable investment programs, and a strategic location makes it highly attractive to investors.

   
   

2. Lithuania: Experiencing a 114% increase in house prices over the same period, Lithuania's real estate market has been on a significant upward trajectory. The country's economic growth and increasing demand for housing contribute to this trend.

   
   

3. Czechia: With a 112% rise in house prices from 2015 to 2024, Czechia's real estate market reflects strong demand and economic stability, making it a favorable environment for property investments.

   
   

4. Netherlands: The Dutch housing market has seen significant annual increases in property prices, particularly in the second quarter of 2024, driven by falling mortgage rates and a resilient economy.

   
   

5. Spain: Despite challenges, Spain's property market has shown resilience, with significant annual increases in property prices observed in the second quarter of 2024. However, rising rents and housing costs have led to public protests, highlighting the need for affordable housing solutions.