Hungary Construction Faces Slowdown

Photo: Unsplash

Hungary’s construction industry experienced a modest downturn in 2025.. According to a ResearchAndMarkets report, construction output is expected to contract by around 2% in real terms. The slowdown is driven by weaker activity in real estate and industrial construction, rising political uncertainty ahead of the 2026 parliamentary elections, and an increasing shortage of labour across the sector.

Macroeconomic and fiscal pressures

The construction slowdown reflects broader economic constraints. Data from the Hungarian Central Statistical Office show that value added in real estate activities declined by 0.2% year on year in the first half of 2025, following modest growth in 2024. Elevated budget deficits are adding further pressure, with the year-to-date deficit reaching around 70% of the full-year target by September 2025, limiting fiscal flexibility for public investment.

EU funding uncertainty

Access to European Union funding remains a critical risk factor. Ongoing disputes between Hungary and Brussels over rule-of-law issues continue to cloud the availability of EU financing, a key pillar for infrastructure development. This uncertainty weighs particularly heavily on transport and utilities projects, which have historically relied on European support.

Recovery expected from 2026 onward

Despite near-term headwinds, the medium-term outlook for Hungary’s construction sector is more optimistic. The industry is forecast to rebound with an average annual growth rate of 4.7% between 2026 and 2029. Increased investment in transport infrastructure, residential development and energy projects is expected to underpin the recovery.

Infrastructure and energy drive long-term growth

Major projects are already shaping the forward pipeline. Construction of the M1 motorway expansion between Budapest and Győr began in September 2025 and is scheduled for completion by August 2029. In parallel, government targets to raise the share of renewables to 20% of the national energy mix by 2030 and to develop one gigawatt of energy storage capacity are set to generate sustained demand for construction and engineering services.

As reported by International Investment experts, Hungary’s construction downturn in 2025 appears cyclical rather than structural. While fiscal and political constraints weigh on short-term activity, long-term infrastructure and energy commitments provide a solid foundation for recovery and renewed investor interest beyond 2026.