According to fresh Eurostat data, housing prices across the EU continue their rapid ascent. In the first quarter of 2025, residential real estate prices rose by 5.7% year-on-year across the Union, with Hungary slightly above this average at 5.8%. This trend aligns with longer-term developments: since 2010, EU property prices have increased by nearly 58%. Hungary, however, far outpaces the average — between 2010 and Q1 2025, housing prices surged by an astonishing 260%, placing the country among the top performers in the EU, second only to Portugal.
While this trend is welcome news for real estate investors, it poses a significant challenge for young people and first-time homebuyers. Steep price increases have effectively priced out those without substantial savings or family support. At the same time, a parallel rise in rental prices leaves little room for alternatives.
It is in this environment that the Hungarian government is launching its new housing initiative: the Otthon Start mortgage programme, set to begin in September. The scheme will offer mortgage loans at a fixed interest rate of 3% for first-time homebuyers. By comparison, the Hungarian National Bank (MNB) reported an average market mortgage rate of 6.7% in May. Given Hungary’s booming mortgage market—loan volumes in the first five months of 2025 were up 27% year-on-year—this new subsidised credit facility could provide a significant boost.
The primary aim of the programme is to ease the burden of runaway housing costs and restore access to homeownership for families that have been priced out of the market in recent years. While the programme’s technical details are still being finalised, the artificially low interest rate is already proving to be an attractive proposition for many households.
However, the measure raises an important question: how much will it stimulate demand—and, consequently, drive prices even higher? With supply slow to adjust (housing construction remains near multi-year lows), the subsidised credit may well fuel further price increases. Still, it is likely to broaden the base of potential homebuyers. While the new initiative may ease some of the Hungarian housing market’s structural tensions, meaningful improvement would require deeper reforms—including public rental housing schemes and targeted urban development policies. Additionally, the Otthon Start programme imposes a substantial fiscal burden on the Hungarian budget.
GKI Assessment
The Otthon Start mortgage programme is a timely and important initiative that could provide meaningful assistance to young families and first-time homebuyers. In an environment where high market interest rates continue to block many from entering the housing market, this subsidised credit scheme may significantly enhance access to homeownership. It also has the potential to improve housing security and promote social mobility.
However, to achieve lasting impact, demand-side incentives should be accompanied by supply-side measures. Stimulating construction, streamlining building regulations, and launching targeted rental housing programmes could help establish a more balanced and resilient housing market in the long term. This would ensure that support reaches a broader segment of society—not just higher-income households.
From a macroeconomic perspective, integrating the programme into a policy environment focused on inflation control undoubtedly requires careful consideration. Nevertheless, with appropriate regulation and well-targeted implementation, it is possible for the renewed momentum in the housing market to support economic growth without risking overheating or fuelling social tensions.
