Analytical Report · Hungary

Subsidized mortgages are boosting demand, but the supply shortage persists

Hungary has launched a large-scale subsidized mortgage program called Otthon Start—and in the very first month, the volume of loans issued rose by 129%. But with a chronic shortage of new housing, demand is driving up prices.

Sources: Eurostat · MNB · HCSO

The Hungarian government has launched a more extensive demand-support program through Otthon Start, but against the backdrop of a chronic shortage of new housing, this is already pushing the market toward a new round of price increases and could further worsen housing affordability in the medium term.

01 / Key Construction Indicators

Key indicators of housing construction in Hungary

thous. units · HCSO

Permits issued, in thousands

Housing completions, in thousands

Source: HCSO. * 2025 — forecast

Key figures and conclusions

×4

Price growth over 10 years — EU leader

+129%

Growth in mortgage lending in October 2025 (year-over-year)

12,400

Housing completions in 2025 — the lowest since 2016

40,000

We need new units per year

24%

Price growth rate — Q3 2025

30%

The rate of price growth in Budapest

The Hungarian government is taking steps to address the prolonged housing affordability crisis caused by rapidly rising prices.
Hungary leads all EU countries in terms of housing price growth: over the past 10 years, prices have quadrupled.
On September 1, 2025, the Otthon Start affordable mortgage program was launched with an annual budget of up to 0.4 billion euros.
The launch of the program gave a sharp boost to demand: in October 2025, the volume of mortgage loans issued rose by 129% to 258 billion forints.
Demand is rising amid limited new supply: only about 12,400 housing units are expected to be completed in 2025—the lowest level since 2016.
According to expert estimates, the country needs about 40,000 new units per year to meet pent-up demand.
Despite a 37% year-over-year increase in the number of building permits issued over the first nine months of 2025, the required completion volumes remain out of reach.
According to preliminary estimates by the MNB, the annual rate of price growth accelerated to 24% in the third quarter of 2025, and to 30% in Budapest.
If the current terms of the Otthon Start program remain unchanged, the combination of high demand and limited supply could drive prices even higher and reduce housing affordability.

* According to preliminary estimates by the MNB

02 / Price Trends

Cumulative increase in housing prices since the fourth quarter of 2015

% · Eurostat, MNB

Hungary

EU (average)

Sources: Eurostat, MNB

03 / Mortgage Market

Mortgage lending in Hungary

billion forints · MNB

Market-rate mortgage

Government support

Source: MNB. * October 2025 — preliminary data

04 / Program and Risk

Otthon Start — Terms and Conditions

Eligible participants: Hungarian citizens purchasing a home for the first time on the primary or secondary market.
Terms: a fixed interest rate of 3% per annum (compared to a market rate of approximately 7%); down payment—10% or more; loan term—up to 25 years.
Maximum loan amount: up to 50 million forints (approximately 125,000 euros).
Limits: apartments—up to 100 million forints; houses—up to 150 million forints; price per square meter—up to 1.5 million forints.

What it means for the market

The program quickly increased access to credit for households, but did not address the structural shortage of new housing.
The supply of new housing remains significantly below market demand, so the surge in demand is primarily driving price increases.
Even a significant increase in building permits does not yet guarantee a rapid rise in completions.
Without parallel measures to expand the housing supply, the impact of subsidized mortgages could be partially offset by further increases in housing prices.

Analytical Report · Finland

"The Finnish Phenomenon": Sales Are Rising, Prices Are Falling

In most EU countries, a rebound in demand is driving prices up. Finland is the only exception: despite an increase in transactions, housing prices have been falling for the third consecutive year.

Sources: Eurostat · Statistics Finland

As the ECB cuts interest rates, demand for residential real estate in EU countries is rising, supporting moderate price growth. The only exception is Finland, where prices have been falling for the third consecutive year.

01 / Key Construction Indicators

Initiating and launching housing projects in Finland

thous. units · Statistics Finland

Projects launched

Put into operation

Source: Statistics Finland

Key figures and conclusions

−3,1%

Price decline in Q3 2025

+11%

Growth in the number of transactions in 2025

~20,000

Housing completions in 2025 — a 30-year low

+5–6%

Average price increase in the EU since the end of 2024

Share of new construction in sales since 2022

1–2%

2-Year Price Growth Forecast

Since late 2024, changes in housing prices in the EU have stabilized at around +5–6% per year, which is in line with the average figures for 2016–2020.
The only exception was Finland, where, despite a recovery in demand, housing prices have been falling for the third consecutive year. In the third quarter of 2025, prices fell by 3.1% year-over-year.
Housing sales in Finland are following the pan-European trend: in 2024, buyer activity began to gradually recover, and in 2025, the number of transactions rose by 11%.
The rise in sales is occurring against a backdrop of a decline in the supply of new housing. In 2025, the number of projects launched and completed reached a 30-year low—no more than 20,000 units per year.
It would be logical to expect that a shortage of new housing, coupled with rising demand, would drive up prices. But this is not happening—and there are several explanations for this “Finnish phenomenon.”
The new-construction sector has traditionally had a limited impact on the market. Over the past 10 years, new-construction units have accounted for no more than 16% of total sales, and since 2022, barely 4%.
An oversupply in the secondary housing market due to rising mortgage rates in 2022–2023, as well as tax and housing reforms in the country.
Since 2025, buyers have shown interest in deals but have been hesitant to make purchases due to the wide selection of properties available. As a result, sales have been rising but have yet to reach the levels seen in 2019–2020.
Given the current situation, no significant changes in housing prices are expected in Finland in the near future. The forecast for price growth is no more than 1–2% over the next two years.

02 / Price Trends

Changes in housing prices in Finland and the EU, % year-over-year

% · Eurostat

Finland

EU (average)

Source: Eurostat

03 / Key reforms that have impacted the market

1. Tax System Reform

Starting in 2023, interest on a mortgage loan taken out for the purchase or major renovation of a home in which the owner resides will no longer be tax-deductible.
The percentage of deductible expenses decreased from 100% in 2011 to 5% in 2022, and as of 2023, the deduction has been eliminated entirely.
Starting in 2024, first-time homebuyers will no longer be exempt from the property transfer tax (3% of the home’s price).

2. Reforming the Kela subsidy system

Kela provides low-income households, students, and retirees with assistance to cover the costs of rent or housing expenses.
In 2024, housing subsidies were cut, affecting more than 400,000 households: the maximum reimbursement rate was reduced from 80% to 70%.
Starting in 2025, housing benefits will no longer be paid for owner-occupied housing. The only exception applies to pensioners.

Reduction in the mortgage interest deduction

% of deductible expenses

2011

100%

2015

60%

2019

25%

2022

2023+

Source: Ministry of Finance of Finland

Forecast

Given the current situation, no significant changes in housing prices are expected in Finland in the near future. The forecast for housing price growth is no more than 1–2% over the next two years. The “Finnish phenomenon” is the result of a unique combination of excess supply in the secondary market, fiscal reforms, and changes in buyer behavior.

Analytical Report · Cyprus

Growth, the Affordability Crisis, and the Government's Response

Cyprus is breaking records for sales and building permits—yet it also has the worst housing crisis in the EU. The government is tightening regulations on foreign demand and launching affordable housing programs.

Sources: Cyprus Ministry of Interior · Central Bank of Cyprus · CYSTAT

Despite strong market growth, the Cypriot government is taking increasingly active steps to address the issue of housing affordability for the local population. Alongside the expansion of housing programs, the government is beginning to restrict certain channels of foreign investment demand.

01 / Key Construction Indicators

Trends in the issuance of building permits, for the first 11 months, in thousands

thous. units · CYSTAT

Building permits

Source: CYSTAT

Key figures and conclusions

18,000

Deals in 2025 — a record since 2007 (+15% year-over-year)

€2+ billion

Mortgage lending in 2025 (+36% year-over-year) — a record high since 2010

11,2%

Residents with housing problems — the worst figure in the EU

~⅓

Price increases in 2020–2025

40%

Share of foreign buyers in 2020–2025

5,500

Permits issued in the first 11 months of 2025 (+24%) — a 15-year high

In 2025, more than 18,000 residential property sales were concluded in Cyprus (+15% year-over-year)—the highest figure since 2007.
The volume of mortgage lending exceeded €2 billion (+36% year-over-year)—for the first time since 2010.
11.2% of Cyprus’s residents face housing problems—the highest rate in the EU, compared to an average of 4.9%.
Between 2020 and 2025, housing prices in Cyprus rose by nearly a third, and about 40% of homes were purchased by foreign buyers.
In the first 11 months of 2025, the number of building permits rose by 24% year-over-year to 5,500—a record high for the past 15 years.
Starting in 2024, the government launched programs to increase the supply of affordable housing for sale and rent to local residents.
Despite these measures, housing prices rose by another 7% in 2025, and foreign investors purchased more than 7,000 properties—an 18-year record.
Starting in March 2026, the requirements for obtaining a residence permit through investment have been tightened: the minimum annual income for investors has increased from 30,000 to 50,000 euros.
There is also discussion about the possibility of restricting home purchases by third-country nationals who are not EU citizens.

Sources: Cyprus Ministry of Interior, Central Bank of Cyprus, CYSTAT. The EU average for housing problems is 4.9%.

02 / Home Sales

Housing sales in Cyprus

thous. units · Cyprus Ministry of Interior

Residents

Non-residents

Source: Cyprus Ministry of Interior

Share of non-residents in sales

% · Cyprus Ministry of the Interior

2020

37%

2021

36%

2022

44%

2023

44%

2024

39%

2025

40%

03 / Price Trends

Housing Price Trends in Cyprus

% · Central Bank of Cyprus

Cumulative total as of Q4 2020

Change from year to year

Source: Central Bank of Cyprus

04 / Government Affordable Housing Programs

"Stegazo to Mellon Mou"

The government allows developers to increase building density by 25–45%, provided that 15–25% of the additional floor area is allocated for affordable housing.
Such properties must be sold to Cypriot citizens at cost.
If the property is not purchased within two years, the government undertakes to acquire it and offer it for rent on preferential terms.

“Renovate and Rent”

The program provides grants of up to 35,000 euros for the renovation and energy efficiency improvements of vacant housing.
Requirements: The building must be at least 15 years old; the property must have been vacant since at least October 2023.
Once renovated, it must be made available to Cypriot citizens with an income below the median, at a price approximately 30% below market value.

Tighter conditions for the Investment Promotion Program (effective March 2026)

Comparison of requirements

By March 2026

€30,000

minimum annual income

Starting in March 2026

€50,000

minimum annual income +66%

The list of eligible properties has also been narrowed. Restrictions on purchases by non-EU citizens are currently under discussion.

Analytical Report · Kazakhstan

Record-breaking construction is entering a phase of stricter oversight

Kazakhstan is increasing housing supply and maintaining high demand, but the government is shifting its focus from quantity to transparency, quality, and curbing speculative demand.

Sources: BNS Kazakhstan · KHC · Government of Kazakhstan

Kazakhstan’s housing market remains active: a record 20.1 million square meters of housing was completed in 2025, and prices were still rising at double-digit rates in March 2026. At the same time, regulatory changes are expected to eliminate non-transparent sales of off-plan housing.

01 / Key Construction Indicators

Housing Construction in Kazakhstan

million square meters · National Statistical Service of Kazakhstan

Housing units completed

Plan 2026

Sources: National News Agency of Kazakhstan, Government of Kazakhstan. 2026 — plan.

Key figures and conclusions

20.1 million

Square meters of housing completed in 2025 — a record

+3,6%

Sales Agreements in 2025

67%

Properties under construction were sold without warranties or permits

145,000

Apartments in the "shadow" market, according to KHC's assessment

+16,6%

New Construction Projects in March 2026

25.1 m²

Housing Availability per Person in 2025

In 2025, Kazakhstan added 20.1 million square meters of housing, which is 5.1% more than in 2024 and exceeds the target of 19.2 million square meters.
The government’s target for 2026 is lower—18.5 million square meters—meaning that, following a record year, more moderate growth is expected in the sector.
Demand remains strong: the number of residential real estate sales transactions in 2025 increased by approximately 3.6% year-over-year.
According to estimates by the Kazakhstan Housing Company, about 67% of the projects under construction—approximately 390 residential complexes and 145,000 apartments—were sold without guarantees from a single operator or permits from local authorities.
On August 31, 2025, amendments to the law on shared ownership took effect: they strengthen the registration of contracts, oversight of sales, and protection of homebuyers during the construction phase.
Preliminary reservation agreements, investment schemes, cash payments, and mortgages for properties without permits or guarantees are prohibited.
Starting in 2026, tax changes will tighten anti-speculation measures: to sell a home purchased after January 1, 2026, tax-free, you must have owned it for at least 2 years, and for certain segments of the primary market, 3 years.
Prices remain under pressure: in March 2026, new housing prices rose by 16.6% year-over-year, resale housing prices by 11.0%, and rents for comfortable housing by 11.7%.
In the short term, the new rules may slow down product launches and sales, but in the medium term, they should increase market transparency and reduce risks for buyers.

More up-to-date figures for 2025–March 2026 have been added, as the PDF mainly contained data covering 9–10 months of 2025.

02 / Sales Agreements

Number of residential real estate sales transactions

thousand units · National Statistical Service of Kazakhstan

Agreements

Sources: National Statistical Service of Kazakhstan, analytical publications based on data from the National Statistical Service.

03 / Price Trends

Price Changes in March 2026

% YoY and % compared to December 2020 · National Statistical Service of Kazakhstan

Annual Change

Since December 2020

Source: BNS Kazakhstan, housing market price indices for March 2026.

04 / Regulatory Changes

What Will Be Prohibited Starting in 2025

Sale of off-plan housing through reservation agreements, investment agreements, or other preliminary arrangements instead of a shared-ownership agreement.
Cash payments for the purchase of a home.
Mortgage lending for properties without permission from local authorities or a guarantee from the Kazakhstan Housing Company.
Advertisements for the sale of housing in developments that do not have the necessary permits or guarantees.

What it means for the market

Some developers will be forced to legalize their sales or exit the market, which could temporarily reduce the number of new projects launched.
Buyers receive greater legal protection, especially during the construction phase.
A decline in speculative sales could dampen demand, but it could also bolster quality and confidence in the primary market.
Risk for 2026: short-term price increases as supply adjusts to the new regulations.

Analytical Report · Germany

Crisis, correction, recovery—and the deficit that remains

More than a decade of zero interest rates by the ECB drove housing prices to a level that the Bundesbank described as a 15–40% overvaluation. The ECB’s tight monetary policy caused the market to crash, and now it is returning to growth—but the supply shortage remains a key problem for years to come.

Sources: Destatis · Bundesbank · IfO Institute · IW Köln · vdp · ECB · BBSR

The ECB’s tight monetary policy in 2022–2024 caused mortgage demand in Germany to plummet—and at the same time forced developers to halt new projects. The structural shortage that is currently holding back the market is already set to persist for years to come. Germany’s experience shows that housing supply must be maintained even while demand is falling, rather than after it has recovered.

01 / Context: A Decade of Overheating

Until mid-2022, Germany’s housing sector had been operating for more than 10 years amid low inflation and near-zero ECB interest rates.
During the pandemic, mortgage rates hit a low of 1.1%, which gave a sharp boost to sales. In 2021, housing prices rose by 12.6%—the highest rate in a decade.
According to the Bundesbank’s estimates, by 2022, housing prices in German cities exceeded their fundamentally justified levels by 15–40%.
The prolonged boom created a high base for a subsequent correction: the 2023 crisis should be viewed not only as a consequence of the ECB’s interest rates, but also as a cooling off of an overvalued market.

"By 2022, housing prices in German cities were 15–40% above their fundamentally justified levels."

Bundesbank, 2022 Forecast

02 / Key Construction Indicators

Building Permits and Housing Occupancy Permits in Germany

thousands of units · Destatis, IW Köln

Permits (thous.)

Housing units completed (thousands)

Target level: 400,000

Market demand: 320,000 (BBSR)

Sources: Destatis (actual data through 2025), IW Köln (forecast for 2026–2027). The government’s target is 400,000 units per year; the actual market demand, as estimated by BBSR, is 320,000 per year.

Key figures and conclusions

−10,2%

The drop in prices in the third quarter of 2023 was the largest since 2000

−40%

Mortgage Issuance for the First 11 Months of 2023

+10,8%

The increase in permits in 2025 — the first since 2021

26 months

Average delay between authorization and implementation

320,000

Actual market demand — BBSR assessment

€23.5 billion

Budget for Affordable Housing Through 2029

The ECB's tight monetary policy (with a maximum rate of 4.5%) has caused the sharpest decline in housing prices in Germany since 2000: in the third quarter of 2023, prices plummeted by 10.2% year-over-year.
Mortgage rates rose from 1.1% during the pandemic to 4% in 2023. Mortgage approvals for the first 11 months of 2023 fell by 40% year-over-year.
Starting in June 2024, the ECB began cutting its interest rate—to 2.15% in June 2025. Mortgage rates returned to their early-2023 levels (3.7% in May 2025).
Mortgage origination rose by nearly a third in the second half of 2024 and continued to grow in 2025: +34% year-over-year for the first five months of 2025.
Prices are rising again: after hitting a low in Q3 2023 (−10.2%), the market returned to positive territory by the end of 2024. In Q4 2025, prices rose by 3.0% year-over-year, and by 3.2% on average for 2025.
Building permits in 2024 fell to 216,000—the lowest level since 2010. In 2025, permits rose for the first time since 2021, reaching 238,500 (+10.8% year-over-year).
However, despite the resumption of permits, the forecast for housing completions continues to decline: 252,000 in 2024, 235,000 in 2025, 215,000 in 2026, and about 200,000 in 2027.
The reason is that the delay between obtaining a permit and completion averages 26 months (up to 34 months for apartment buildings). The shortfall in permits issued in 2022–2024 is already reflected in the completion schedule for the next 2–3 years.
According to BBSR estimates, the actual market demand is 320,000 units per year. Actual production is nearly half the government’s policy target of 400,000.

03 / Housing Price Trends

Year-over-year increase in housing prices in Germany, %

Historical Context and Quarterly Trends · Destatis

Historical Context (Average Annual Growth Rate / Year)

Quarter-over-quarter, year-over-year growth

Quarter-over-quarter, year-over-year, decline

Source: Destatis (as of March 25, 2026, House Price Index, 2015=100). On the left: average annual growth rate for the decade and for 2021. On the right: quarterly trends from Q1 2022 to Q4 2025.

04 / Mortgage Market

The ECB's refinancing rate and the average mortgage rate

% per annum · ECB, Bundesbank

Average mortgage rate in Germany

ECB Refinancing Rate

Sources: ECB, Bundesbank.

Volume of residential loans issued

billion euros · Bundesbank

Source: Bundesbank. In the first five months of 2025, lending increased by 34% year-over-year; in the first half of 2024, it increased by 23%.

05 / The Rental Market: Where the Pressure Is Concentrated

Structural Features

Only 47% of households in Germany own their own homes—one of the lowest rates in the EU. 53% rent.
The decline in new construction, coupled with population growth driven by migration, is exacerbating the shortage of rental housing in particular.
In the third quarter of 2023, rental rates rose 6% year-over-year—faster than purchase prices.
According to the vdp index, new rental rates rose by 4.6% year-over-year in Q4 2024—pressure on the market continues.

Regulatory response

The Mietpreisbremse (rent cap) limits rent increases for new leases in certain "high-demand" cities.
The program has been extended at least through the end of 2029—the first sign that the deficit won't be resolved anytime soon.
Bau-Turbo — the new provision under §246e of the BauGB, which allows municipalities to build housing without zoning plan approval and reduces the review period to 3 months.
According to CBRE's assessment, the noticeable effects of the reforms are not expected until at least 2026.

06 / Government Measures and Support Programs

Speeding Up Construction: Bau-Turbo

Legal basis: the new Section 246e of the Building Code (BauGB), which took effect on October 30, 2025. This is a pilot provision that remains in effect until the end of 2030.
How it works: A city or municipality decides to apply Bau-Turbo to a specific project. This eliminates the need to approve or amend the zoning plan (Bebauungsplan), a process that previously took several years.
Review period: 3 months—after that, additional housing may be approved.
Who initiates it: The initiative can come from the developer or from the community itself. The community decides for itself to what extent it will use Bau-Turbo.
Environmental filter: Deviations from zoning plans are permitted only if they do not have a significant impact on the environment and take the interests of neighbors into account.
Related amendments: Simplified procedures for adding stories to existing buildings and converting commercial spaces into residential units.

Financial and Social Support

€23.5 billion from the budget for affordable housing by 2029—following approximately €8 billion for 2022–2024.
€11+ billion from the new infrastructure modernization fund.
The “1% for Families” Program (starting in June 2023): a preferential mortgage for low- and middle-income families with children. The interest rate is 1%—3 percentage points below the market rate—fixed for 10 years, with a loan term of up to 35 years.
The Mietpreisbremse (rent cap) in high-demand regions has been extended through the end of 2029.
Protections against the conversion of rental housing into condominiums in certain regions have been extended from 2025 through the end of 2030—as a measure to prevent the displacement of residents.

07 / A Lesson for Ukraine

It is important to maintain the housing supply even when demand is falling. A reduction in new construction creates a shortage, which then puts upward pressure on prices for years to come.
The “permit → commissioning” cycle averages 26 months. The low number of permits issued in 2022–2024 has already led to a commissioning shortfall for 2026–2027—a situation that cannot be remedied even by a rapid increase in permits now.
Streamlining permitting procedures is the most effective way to increase supply. Bau-Turbo—with a 3-month review period and the elimination of mandatory zoning plans—is an example of this regulatory approach.
Stable government programs—such as affordable housing and subsidized mortgages for families—have proven effective as a buffer during times of crisis.
The structural shortage that emerged during the demand crisis does not disappear on its own as the economy recovers. It persists in the market for years and hinders housing affordability even as real incomes rise.

Conclusion.

Germany’s experience shows that the housing market recovers when monetary policy is eased—but a return to rising prices does not mean the affordability problem has been solved. The structural shortage that developed during the demand crisis will persist in the market for years to come. Without proactive policies to support supply—such as streamlining permits, financing affordable housing, and targeted mortgage programs—even a reduction in interest rates will only accelerate price growth without increasing the supply of housing.