Fall in Hungary’s overheated property market exposes finance-sector vulnerabilities
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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.
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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.