Restricting Airbnb and other short-term rentals is an increasingly common response to housing affordability problems in Budapest and major cities around the world.
Many public figures and commentators support the idea: move more apartments into long-term rental, increase supply and put downward pressure on rents, while fewer investors competing for properties could also ease pressure on purchase prices.
But falling property prices don't automatically make housing more affordable.
City-Lets has seen former short-term rentals move into the long-term market, increasing competition and pushing rents down slightly.
Others have chosen to sell instead.
“We've seen a flood of former Airbnb properties come up for sale,” says Alex Markus, Chief Executive, City-Lets Ltd.
“Higher-end and mid-tier properties have corrected by around 20% and 10%, respectively.
“Airbnb isn't the only factor. Interest rates and cost-of-living pressures are also contributing. But instead of suddenly making housing affordable, falling prices have helped create what I would call a gridlock market.
“Sellers are thinking, ‘What's the point? We're not going to get our price.’ Buyers are thinking exactly the opposite: ‘Why should I buy now if it could be cheaper in six months?’
“So neither side makes their next move.”
Otthon Start brought a wave of first-home buyers into the market. MNB data shows their share of Budapest purchases increased from around 25% to 40%.
In City-Lets' experience, many who bought quickly had parents helping with deposits or other purchase costs.
“A lot of those buyers have now bought,” says Markus.
“The vast majority of young people left behind don't have that family support. Making a property cheaper doesn't necessarily mean they can suddenly raise the deposit or qualify for financing.
“And falling prices don't just make properties cheaper. They hit confidence.
“If I buy this for HUF 100 million today, what happens if it's worth HUF 90 million in six months? That's what buyers are asking themselves.
Entry-level homes have held their prices better, while mid-tier and higher-end properties have fallen further.
“If your existing apartment has held its value reasonably well and the larger property you want has fallen 15 or 20%, your apartment becomes a launch pad,” says Markus.
“You can suddenly trade up at a much smaller price gap. So in a cruel twist, the second- or third-home buyer can benefit more from falling prices than the first-home buyer lower prices were expected to help.”
“When people feel poorer, they behave differently,” says Markus.
“They postpone renovations. They delay moving or upgrading to another property. They spend less freely. They become more cautious about helping their children with a deposit. Investors pull back.
“That's the wealth effect. Making homeowners poorer doesn't automatically make somebody else capable of buying their home.”
For Markus, the solution is more homes, not lower property values.
Hungary completed only 12,000 new homes in 2025, the lowest number since 2016.
“You've got to reduce the risk for developers. They're too scared,” says Markus.
“Fast-track approvals and cut unnecessary red tape so viable projects can get moving.
“We also need more young people entering the building trades and more efficient construction methods.
“If conventional construction is too expensive, modular housing should be part of the answer. Factory production can cut costs and avoid weather delays.
“The answer to a shortage of affordable housing is greater supply. There's a massive difference between creating more homes and trying to make existing ones worth less.”