Budapest's young people are joining the ranks of generation rent

The Guardian

04-07-2025

When I left my family home to study at university in 2007 and moved to downtown Budapest, housing costs were hardly a topic of conversation among my friends. I rented rooms in centrally located flats for £80-£100 per month. Fast forward to 2025 and a similar room in a shared flat would set you back at least £200 – double the price of 15 years ago. Talk to anyone in their 20s in Budapest today, and the deepening housing crisis will inevitably come up as one of the defining struggles of their lives.
The statistics paint an equally grim picture. Between 2010 and 2024, Hungary saw the largest increase of the housing price index among EU member states. While the EU average rose by 55.4%, Hungary's housing price index rocketed by 234%. Meanwhile, per capita net income only grew by 86% in the 2010s. Budapest, the capital, is the centre of this crisis. According to the Hungarian National Bank, residential property prices are overvalued by 5-19%. This is partly explained with the high proportion of investment-driven purchases: these accounted for 30-50% of all transactions in the last five years in Hungary. Unlike in many other EU capitals, property investors in Budapest are not primarily foreign nationals – who accounted for just 7.3% of transactions between 2016 and 2022 – nor are they institutional players. Instead, they are typically individual Hungarian citizens. As real estate has become an increasingly appealing investment for upper- and middle-class households amid growing economic uncertainty, the result has been a deepening polarisation within Hungarian society.
The problem has become so glaring that, after a decade of silence, even the ruling rightwing Fidesz government has begun to acknowledge it in recent months. Since coming to power in 2010 with a constitutional majority, Fidesz's housing policies have focused mainly on subsidising home purchases for middle-class families. Only about 10% of all housing-related government spending has targeted lower-income groups. Meanwhile, Hungary's public housing sector has shrunk dramatically, from covering 20% of the housing stock in 1990 to a mere 2% today.
The government's longstanding neglect of the housing issue is no accident. It stems from a deeply rooted ideological narrative. In 2014, the prime minister, Viktor Orbán, declared in an interview: 'My basic principle is that my house is my castle – I am a believer in owner-occupancy and family homes.' This narrative – common across former eastern bloc countries – paints home ownership as a kind of cultural destiny, portraying the state socialist era's large-scale public housing programmes as historical aberrations.
But this view is neither historically accurate nor economically realistic. In fact, socialist-era housing policies bore strong similarities to public housing systems in western Europe. Affordable housing developments helped the upward social mobility of millions, creating opportunities that had previously been unimaginable. Yet after 1990, anti-communist sentiment combined with 'shock therapy' reforms – including the rapid privatisation of half a million dwellings – forged a political imagination that has sidelined rental and public housing, replacing it with the dream of universal home ownership.
Today, however, that dream is slipping further out of reach. Over the past decade, the proportion of households living in rented housing in Budapest has grown from 12.7% to 17.5%, with young people overrepresented: 35% of this group lived in rented accommodation in 2022. In the past year alone, rents climbed by roughly 10%. Although Hungary's national home ownership rate remains around 90%, a 'generation rent' is clearly emerging in the capital. Young people without family financial support increasingly see home ownership as an unattainable goal. A recent survey found that 38% of the adult population of Budapest would consider renting – if affordable and secure options were available. As the myth of full-home ownership becomes more visibly unworkable, demand for affordable rental housing is growing.
Despite the lack of systematic government support for affordable housing in Budapest, a few hopeful initiatives are beginning to take shape. The municipality of Budapest recently launched a social housing agency, inspired by successful models from the civil sector. With 16.7% of the city's dwellings being unoccupied in 2022, the agency works to connect vacant properties with households in need, offering secure management services to owners and affordable rents to tenants.
Another promising move is that the municipality was recently able to use a legal loophole to buy an 85-hectare (210-acre) brownfield site from the government. Initial plans for the site envision a large-scale sustainable development that could include thousands of affordable housing units. These local government-led interventions, while promising, face constant obstruction from the Fidesz national government, which opposes initiatives led by the green opposition mayor of Budapest.
In the meantime, residents and civil society groups are trying to create bottom-up solutions. The Alliance for Collaborative Real Estate Development, for example, is experimenting with community-led housing models. Inspired by Germany's Mietshäuser Syndikat, the Zugló Collective House Association bought a residential unit in 2018 and has managed it according to cooperative principles, ensuring affordable rents for seven tenants. Without access to public support or ethical financing, the project was funded by direct loans from friends and activists. Similar efforts are being taken on in other capital cities of the region, and the network of these pioneering housing cooperatives – Moba, meaning 'self-build through mutual help' in Serbo-Croatian – is already set up.
These grassroots initiatives could offer some hope for a generation otherwise facing increasing hardships. However, the systematic transformation of these housing regimes can only be imagined if these governments change course – and if the EU starts to channel more direct funding towards affordable housing in Hungarian and other eastern European cities.
Csaba Jelinek is an urban sociologist based in Budapest, focusing on housing and urban development. He is co-founder of Periféria Policy and Research Center and board member of the Alliance for Collaborative Real Estate Development