2025 could be a really challenging year for Hungary's construction sector

One of the most serious problems facing the sector is the scarcity of financial resources and the uncertainty of the economic environment. The weakening of the European economy, especially the German industry, is already being felt in the Hungarian commercial and industrial property market," said Béla Markovich, managing director of Mapei Ltd.. According to the expert,

the situation is exacerbated by the fact that the financing of infrastructure and institutional investment is also being hampered.

Although the freeze on EU funds has been partially lifted, state and local government budgets remain extremely tight. But there is hope that some new infrastructure investment will start in the spring, he added.

According to Attila Juhász, President of Újház Zrt. and ÉVOSZ Building Materials Trade Section, there is no short-term increase in public construction orders, but the residential segment and housing construction and renovation in general are picking up, which is very good news for the large segment of micro, small and medium-sized construction companies operating in this market, which has faced a virtual freeze in demand over the past two years.

How justified is the optimism in the building materials sector?

Market uncertainty remains high in the building materials trade, with volatile sales due to subdued investment and volatile demand, said Béla Markovich, adding that housing subsidy schemes have been expanded but their impact is limited. These subsidies are unable to stimulate the market because of subdued public demand. And the construction sector as a whole is being hit hard by the downturn in the housing market, with industrial, commercial and infrastructure investment unable to make up the shortfall.

Attila Juhász is more optimistic, saying that today's construction data do not reflect the momentum that seems to be building in the housing and renovation market.

The builders' merchant sector has been showing the first signs of recovery for months and in January builders' merchant sales exploded compared to the same period last year," he added.

According to Újház Zrt., the volume of masonry materials (bricks) sold in January was 58% higher than in the previous year.

These are the products that are typically used at the start of construction, which means there are many more self-build, housing and condominium projects across the country than there used to be, he said.

No price boom expected

Despite the significant increase in sales, building materials prices did not rise in January compared to last year, with products still 2% cheaper on average.

Manufacturers and traders do not expect prices to rise much above inflation this year,

stocks are plentiful everywhere and competition is fierce enough to allow consumers to buy building materials at excellent conditions, says Attila Juhász.

What could bring a turnaround?

According to Béla Markovich, a slight upturn in 2025 could see a mass entry into the property market by investors who have been holding high-yielding government bonds. However, the surge in demand could lead to further price increases in the housing market as the supply side tightens due to a sharp fall in new construction. Market forces dictate that when demand rises while supply falls, prices will rise - one of the biggest challenges facing the sector.

Increasing public subsidies, such as widening the availability of the Home Renovation Programme and boosting central institutional investment, could be the solution to boost construction orders, but there is little sign yet of a significant increase in these funds.

Although producer prices rose by 5.6% in the fourth quarter of 2024, which could indicate a slight recovery in demand, the sector as a whole is not experiencing dynamic growth, the expert added, noting that

2025 will be a challenging year for the construction industry.

Unless there is a significant turnaround in investment and financing, the sector could face further stagnation or even a new downturn. However, the government's 21-point economic action plan, the willingness of companies to invest and the capital and interest payments on government securities could give the sector a boost.

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