Domestic housing construction largely depends on the regulatory environment and the state subsidies available to builders and buyers. In recent years, the handover of new homes has declined year by year, with 2025 potentially marking a nine-year low in this regard. The two support schemes launched this year are expected to stimulate the new housing market. The Housing Equity Program could boost supply, while the Home Start Program may drive demand. As a result, by 2027, it may be possible to reach the minimum target of 20–25 thousand home deliveries needed for a qualitative renewal of the housing stock.
The momentum of domestic housing construction was abruptly halted by the financial and economic crisis that began in 2008. Income conditions, business circumstances, and financing possibilities and terms changed drastically as a result. Because projects take a long time to complete, the number of delivered homes did not drop immediately, but the negative impact eventually proved overwhelming: while nearly 36,000 new homes were handed over in 2008, only about 21,000 in 2010, at a decades-long low, and just over 7,000 in 2013. Housing companies were discouraged from launching new projects by falling demand and rising loan costs. During this period, housing prices also fell, making it far more advantageous for buyers to purchase nearly new (i.e., built a few years ago) or second-hand homes rather than new ones. This stagnation lasted until 2015. At that time, the government launched a significant support program. On one hand, it reduced the VAT rate on new homes from 27% to 5%, and on the other, it introduced, and shortly thereafter boosted, the CSOK program available for families with children. These measures put housing construction back on a growth path. By 2020, 28,000 new homes were delivered, nearly quadrupling the number compared to 2015. In 2021 and 2022, momentum slowed somewhat, but deliveries remained around 20,000 units each year. Then came the years of decline: in 2024, only 13,200 homes were built, and in 2025, the GKI estimates that 12,000 homes will be delivered. Over the past four years, construction of single-family homes has fallen more sharply than that of apartments in multi-unit buildings, with the former decreasing to one-third of their previous number, while the latter fell by about half.
Regulatory twists and turns
The reduced VAT rate introduced on January 1, 2016, was abolished from January 1, 2020, and the standard 27% VAT once again applied to the sale of new homes. From 2021, the government reintroduced the 5% VAT on certain new homes under specific conditions (for apartments below a certain size or built in designated brownfield areas). The reduced VAT is still in effect and is planned to remain until December 31, 2026. If it is not extended, the standard 27% VAT will apply to new homes again from January 1, 2027. If this happens, it would deal a heavy blow to real estate developers, housing construction companies, and prospective buyers of new homes.
How many new homes should be built?
The housing stock in Hungary is one of the most important components of the national wealth. In addition, the domestic housing stock is indirectly responsible for at least one-third of CO₂ emissions, mainly due to the energy demand for heating and cooling. Therefore, modernizing existing homes is crucial to achieving climate goals, and newly built, energy-efficient homes should improve the overall performance of the housing stock. Expert estimates suggest that a minimum of 25–30 thousand modern homes would need to be built each year to achieve this. As noted above, only about one-half to one-third of this number was constructed in 2024, and a similar level is expected in 2025.
The government is providing support once more
Launched in March of this year, the Housing Equity Program aims to stimulate growth in housing market supply through real estate fund developments, partly financed by capital provided by the state and partly through private and commercial bank loans. According to plans, this combination could support developments totaling up to HUF 1,000 billion for the housing market. In its two development and sales cycles, the program is expected to deliver roughly 5,000 new homes, rental units, and dormitory capacities per year, which, according to government projections, could total 30,000 new homes. Thus, the Housing Equity Program aims not only to increase the number of new homes but also to promote the diversification of housing types, which is essential in the long term for creating a sustainable housing market.
The other tool is the Home Start Program, announced in July this year, which can provide significant assistance to those intending to purchase their first home. The eligibility conditions are much more lenient than in previous state incentive programs. The total purchase price of the home cannot exceed HUF 100 million (HUF 150 million for single-family homes), and the unit price cannot be higher than HUF 1.5 million per square meter. Due to these limits, only a smaller portion of new homes in Budapest may be eligible for the Home Start loan, but the incentive can be strong in rural areas. The government decision that any project with at least 250 homes, in which at least 70% of the units meet the Home Start program criteria, can become a priority national economic investment may also significantly encourage larger developers to build. All this also means that over the next two to three years, the number of homes delivered could increase significantly, as this is typically the lead time between the issuance of a building permit and occupancy. What could be the real effect of the Home Start Program on domestic housing construction? The positive effect will only be noticeable over a two- to three-year horizon. In 2026, the development of 20–25 thousand new homes could start under the 3% loan program, which could nearly double the number of projects under construction or pre-sale compared to the current level. The actual mass deliveries are expected to appear on the market from the second half of 2027. These two policy measures together will increase housing supply in the coming years, which supports housing mobility.
