Europe Biannual Construction Market Report 1Q/2Q 2025
Hungary
Top opportunities
Industrial, manufacturing and logistics: Strong growth driven by demand for warehousing, factories, and logistics hubs.
Residential: Strong demand for new housing developments and multi-family projects.
Top trends
Green financing: Hungary is experiencing a notable shift toward green financing as sustainability becomes a priority across various sectors. This trend is driven by the growing demand for environmentally friendly projects and alignment with European Union goals for a greener economy.
Local economic indicators
Hungary’s year-over-year (YoY) gross domestic product (GDP) growth in 2024 is reported, by The European Commission, to have been 0.6%, supported by a resilient labour market, strong wage increases, and interest rate reductions. However, exports, particularly in machinery and transport equipment, remained subdued. Looking ahead, GDP is projected to rise to 1.8% in 2025 and further to 3.1% in 2026, with consumption driven by strong real income growth expected to be the primary driver, alongside more moderate growth in exports and investment. When viewing GDP compared to the previous period, QoQ, Eurostat reports that Hungary experienced a retraction of 0.7% between 2Q and 3Q 2024.
Eurostat also reports that in 2024, the construction industry’s gross value added, which measures its contribution to Hungary’s overall GDP, fell slightly from 5.2% to 5% of the total GDP.
Eurostat's Harmonised Index of Consumer Prices (HICP) fell sharply to 3.8% in 2024, a significant improvement from the average of 17% in 2023, driven mainly by declining energy and food prices. However, inflation is predicted to remain sticky, with rates of 3.2% and 2.6% in 2025 and 2026, respectively, as increased demand, a 15% minimum wage hike, and currency depreciation exert upward pressure.
Unemployment figures stood at 4.5% in 2024, with further reductions to 4.3% in 2025 and 4.1% in 2026 anticipated as economic recovery stimulates labour demand.
Construction materials
Eurostat's November data on local industrial producer prices has remained relatively tranquil on a month-over-month (MoM) and YoY basis, with the most significant changes being a MoM increase of 5.3% in electricity and a YoY increase of 8.7% in structural metal products. However, when indexing for June 2022, when oil prices peaked due to the Russia-Ukraine conflict, we can see that only wood experienced a price recovery, 9.4%, and that of the sectors with price increases, electricity, gas, steam and air conditioning supply stood out at 88.2%. While some material prices are likely to remain volatile throughout 2025, the impact of fluctuating costs can be mitigated through increased local sourcing and stronger supplier relationships. See the following table for MoM, YoY and indexed pricing inflation.
Market outlook
In December 2024, Hungary witnessed a small worsening in its construction confidence indicator, CCI, which fell to -21.8 from its November score of -20.5, a trend which has been ongoing since September’s figure of -16.9. This downward trajectory was the result in the worsening of employment expectations from -3.9 to -6.7 and was tempered by a slight improvement in the evolution of order books from -37.1 to -36.9. It is important, however, to recognise that the decrease in the CCI in countries with colder climates during the winter months is also part of a cyclical trend influenced by adverse weather conditions, which slow order books and reduce work expectations.
Insufficient demand remains the most significant constraint, reported at 41 in December. However, this marks a steady improvement compared to the 3Q/4Q average of 46.5. Price expectations for the next three months also pose a notable challenge, with December’s figure climbing sharply to 29.3 from November's 11.4 and the yearly average of 12.2. Labour shortages continue to be an issue, although figures have remained stable throughout 3Q and 4Q, with December’s level recorded at 27.9.
Local office input
As the Hungarian construction industry enters the first half of 2025, it faces a crucial period marked by a decline in new orders, which could lead to a slowdown in activity as existing projects wind down without sufficient replacements. In response, companies are likely to prioritise securing government contracts and pursuing renovation projects focused on sustainability and retrofitting, leveraging eco-friendly construction in their marketing strategies to attract both public and private sector clients in line with evolving regulatory trends.
In 1Q, transport infrastructure upgrades, including road and rail expansions, will be a primary focus, with preparatory work already intensifying for major projects. At the same time, the residential sector is expected to see growth, supported by favourable lending conditions and government incentives aimed at first-time homebuyers.
By 2Q, new regulatory changes targeting sustainability and energy efficiency will come into effect, while the government will launch urban development initiatives, including parks and smart city projects.
In terms of other sectors, office construction is expected to slow due to market saturation and a surplus of vacant Class A office spaces. Hotel development is also likely to remain stagnant, with renovation projects taking precedence over new builds. However, industrial construction is on the rise, driven by government-backed automotive and battery manufacturing projects, which have also spurred increased supplier investments. Public infrastructure projects, including airport expansions and developments at the Paks nuclear power plant, will continue to support the construction sector throughout 2025.
Overall, the Hungarian construction industry in early 2025 faces a mix of challenges and opportunities. While growth is anticipated in infrastructure, residential, and sustainability-focused projects, labour constraints and fluctuating material costs will require strategic planning. The government’s ongoing commitment to infrastructure and housing development will be a key factor in shaping the sector's trajectory moving forward.
Gleeds recommends revising previously set project budgets to present-day figures based on local statistical information and our own internal data. Additionally, we advise investors to consider inflation contingencies in their budgets as materials and labour shortages remain unpredictable.
