Hungary sees construction permit surge, but growth rate slows in second quarter

Hungary's construction sector is showing signs of revitalization, with a notable increase in new building permits issued during the first half of the year. Authorities granted 16,588 permits, marking a 29% rise compared to the same period last year, according to the statistical office. This surge indicates a potential upswing in housing development across the country.

However, the growth pattern reveals a divergence between the first and second quarters. The initial three months of the year saw an impressive 64.4% increase in permits. This momentum slowed considerably in the second quarter, with only a 1.6% rise. Analysts are currently examining the reasons behind this slowdown, noting that the first quarter's figures were the highest in four years.

Budapest remains the primary driver of new housing construction, with 6,560 permits issued, a 9.5% increase year-on-year. The majority of these permits are concentrated in the XIII and IX districts, with plans for 2,561 and 2,364 apartments, respectively. Beyond the capital, cities with county rights experienced a 36% increase in permits, while other towns saw a 55% rise, and villages a 50% increase. Kecskemét, Nyíregyháza, and Debrecen are highlighted as leading regional centers with 578, 498, and 349 permits, respectively.

The government's designation of projects with over 250 apartments as nationally significant investments may be contributing to the boom, potentially streamlining approval and execution timelines. While over 30 projects have received this status, sales have only recently begun for some. Concerns linger, however, as the new government has indicated a review of these significant investment designations. Despite this, analysts anticipate continued growth in both permits and completions this year, with projections suggesting a 30% annual expansion and a more substantial wave of growth expected from 2027 onwards.

“

For now, it is not known what the reason for the above process is; the first quarter of this year was outstanding, as so many permits have not been issued in four years, but the second quarter no longer showed such annual growth.