Hungary’s housing market, the fastest growing in the EU for the past decade, is finally seeing lower prices, Bloomberg reports. Recent single-digit price contractions come on the heels of a 25% rise in house prices in 2022 fueled by record low interest rates, housing subsidies and a jump in wage growth.
The trend has begun to reverse as energy costs and public spending led to Europe’s fastest inflation and forced the central bank to raise interest rates to 18%, crimping demand for mortgages.
Hungary’s central bank says the country’s banks are facing greater risks because of the overvaluation in the housing market. An S&P report from November 2022 found that Hungarian banks projected the EU’s highest mortgage delinquency rates.