The Sándor Wekerle Housing Construction Programme – up to two billion euros could boost the Hungarian housing construction market

The government is set to put state incentives for housing construction on a new footing. According to the government decree published in government decision published in Magyar Közlöny states that the housing support system will be further developed in line with uniform policy principles, with the aim of increasing the housing supply and improving conditions for affordable housing. The Minister for Transport and Investment is to draw up the details of the Sándor Wekerle Housing Construction Programme, in consultation with the Minister for Finance, by 30 September. This will include:

• expanding the supply of housing, 
• increasing the proportion of affordable housing,
• the primary use of brownfield sites,
• ensuring adequate transport links,
• ensuring compliance with quality requirements for town and country planning and urban design,
• strengthening cooperation with local authorities,
• encouraging the development of institutional rental accommodation and student hall of residence places,
• ensuring a predictable regulatory environment for market investments,
• simplifying the regulatory and planning framework for housing construction projects
• encouraging energy-efficient and sustainable housing construction,
• promoting developments that are coordinated with transport, utility and community infrastructure

   

Ownership or tenancy – The aim is to ensure affordable housing

Explaining the background to the programme, Dávid Vitézy, Minister for Transport and Investment, drew attention in his Facebook post to the fact that whilst it is becoming increasingly difficult to buy a home, not enough new flats are being built, rental prices have risen significantly, and the existing housing stock is steadily deteriorating due to a lack of renovation.
According to the ministry’s figures, between 2020 and 2025, the number of new flats brought into use fell from around 30,000 to 12,000 per year. This represents a 60 per cent decline.

Prices in the housing market have consistently risen faster than incomes. Whilst in 2015 the price of an average flat in Hungary was equivalent to 5.9 years’ average net earnings, by 2025 this figure had risen to 7.1 years. According to the Ministry, between 2010 and 2025, real house prices rose by 120 per cent, whilst real wages rose by 60 per cent.

There would be demand for at least 100,000 rental flats

Rents for private lettings have risen by around 30 per cent in real terms since 2015. According to the Ministry’s estimates, there is demand for at least 100,000 affordable rental homes in Hungary.
The programme therefore does not focus exclusively on new homes intended for sale. The development of institutional rental housing and the encouragement of long-term participation by institutional investors have also been included amongst the objectives. A set of financial and regulatory instruments to support the construction of affordable rental housing must be developed by 31 December 2026.
The regulatory framework for establishing the state housing agency system may also be finalised by the same deadline.

Construction of halls of residence – there are currently 49,000 places for 320,000 students

Expanding student hall of residence capacity could represent a separate area for development. According to the ministry’s figures, there are only 49,000 places in student halls of residence for some 320,000 students in Hungary; consequently, a significant proportion of those in higher education are forced to seek accommodation on the private rental market.
In accordance with the government resolution, tax policy measures aimed at expanding the supply of flats and halls of residence, as well as developing the supply in the private rental sector, must also be examined. Proposals on these matters must be submitted to the government at the same time as the 2027 Budget Act is tabled.

As well as housing, infrastructure must also be built

The Sándor Wekerle Housing Programme has the potential to generate new orders in several sectors of the construction industry. According to the government’s plans, these housing projects cannot be realised without the necessary infrastructure. Adequate transport links, utility capacities and community services must be ensured; thus, in addition to building construction tasks, road, utility and other infrastructure developments may also be linked to the investments.
The programme must uphold quality standards in town planning and urban design, and encourage the creation of energy-efficient and sustainable residential buildings. Strengthening cooperation with local authorities will also be a key priority.

They promise a simpler and more predictable licensing process

A key objective for players in the construction sector is to simplify the regulatory and planning framework for housing developments and to enhance its predictability.
The government decree also provides for the creation of a more predictable regulatory environment for market-led investments and for encouraging the long-term participation of institutional investors

Major housing development projects are to be scrutinised

In accordance with the requirements of the Wekerle Programme, the current priority housing investment projects will also be reviewed by 31 October. The review will examine not only how many new homes each project will add to the housing supply, but also the extent to which they provide affordable homes.

They also appreciate

• the transport links for the projects;
• the availability of the necessary utility and infrastructure developments;
• compliance with town and country planning and urban design requirements;
• the implementation of local authority cooperation;
• as well as the social and environmental impacts of the projects.

Following the review, the priority status of individual investment projects may remain unchanged, be subject to amended conditions, or be revoked. The consolidated proposal must be prepared for the Government by 30 November.

The €550 million in EU funding could be supplemented by bank and market financing

According to Dávid Vitézy, 550 million euros from EU funds now available to Hungary can be allocated to the programme. This may be supplemented by co-financing from banks and the market, meaning the total amount available could reach two billion euros.  
However, the programme’s actual impact on the market will depend on what funding arrangements, streamlined authorisation procedures and specific project portfolio the detailed rules – due to be finalised this autumn – prescribe to achieve the stated objectives.