According to Orep4vysipes, in Hungary, from 1 January 2027, the VAT rate for some new homes may rise from the current preferential rate of 5 per cent to the standard rate of 27 per cent, which will put further pressure on the cost of flats in new-build developments, according to local media reports.
The current reduced rate of 5 per cent applies to new flats with a floor area of up to 150 square metres and detached houses with a floor area of up to 300 square metres that meet the specified requirements. According to an official clarification from the Hungarian National Tax and Customs Administration (NAV), this scheme, in its current form, remains in force until 31 December 2026. After that, the standard VAT rate of 27 per cent will apply to properties that do not meet the conditions of the transitional period.
However, a significant proportion of projects already underway will be able to retain the tax relief until the end of 2030. In particular, the 5 per cent rate may apply after 31 December 2026 if the necessary building permit has been granted final approval by the end of 2026. Transitional provisions are also in place for projects carried out under the building notification procedure.
As a result, the Hungarian market may effectively see new-build properties with different tax burdens coexisting, depending on the project’s start date and legal status. The potential impact on property prices could be significant. An apartment costing 100 million forints, taking into account the current 5 per cent VAT rate, has a pre-tax price of approximately 95.2 million forints. If a 27 per cent rate were applied to the same base price, the final cost would amount to approximately 121 million forints. The theoretical difference is around 21 million forints, or approximately 58,000 euros.
However, the actual rise in prices may turn out to be smaller, as developers, faced with weakening demand, may absorb part of the additional tax burden themselves. A decline in buyer activity is already being observed in the market. According to data from the National Bank of Hungary, the number of property transactions in the first quarter of 2026 fell by 18 per cent compared with the same period the previous year. According to Duna House’s estimates, around 8,100 residential property transactions were concluded in August — 13.1 per cent fewer than in July and 29 per cent fewer than a year earlier.
At the same time, developers are stepping up preparations for new projects. In the first half of 2026, permits were issued and construction notifications registered for 16,588 residential properties in Hungary, which is 29 per cent more than in the same period of 2025. The change in the tax regime does not directly affect the secondary housing market. However, the widening price gap between new developments subject to 27% VAT, properties retaining the 5% rate, and the secondary market may influence the structure of demand and house prices in general. Certain new flats in officially designated ‘rust belt action areas’ will remain exempt: provided the stipulated conditions are met, the preferential 5% rate will continue to apply after 1 January 2027.