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Hungary Housing Market

Hungary Housing Market: 20-Year Trends and CSOK Impact

This article delves into the intricacies of the Hungarian real estate market, examining the concept of real value versus nominal value, the impact of inflation and other economic indicators, the presence of foreign buyers, changes in sales dynamics, and the current state of the rental housing market. As we navigate through these aspects, we aim to provide a comprehensive understanding of the factors influencing housing prices in Hungary and the potential implications for both domestic and foreign stakeholders in the real estate sector.

Development of housing prices in the last 20 years in Hungary Housing Market

The Hungary Housing Market, the most widely followed and universally affecting segment in real estate, has witnessed outstanding growth over the past 5 years within a 20-year perspective. This remarkable surge is primarily attributed to the Family Housing Allowance (CSOK) and favorable loans. However, since the last quarter of 2022, a sharp decline in demand and transactions has led to prices stagnating at nominal values, with 2023 marking the worst period in the past 15 years, experiencing nearly a 50% decrease in turnover.

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Real Estate Prices in Hungary Housing Market

It is important to clarify the concept of real value versus nominal value! In the first half of 2023, there was an annual basis decrease in real estate prices, with a 15.4% decline in real estate prices in the first quarter of 2023. The second quarter saw a more pronounced decrease of 18.9%. Key macroeconomic fundamentals determining the real estate market trends (real incomes, household lending) may unfavorably evolve in the first half, dampening housing market demand and potentially influencing a decline in real estate prices. Investors have vanished from the market.

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Inflation and Other Economic Indicators

In the Hungary Housing Market, inflation (graph to the right) has reached its peak, influencing every aspect of our lives, including real estate transactions. While high inflation is a crucial indicator for the ‘average person’ in the economy, other significant factors such as employment rates, average wage levels, purchasing power, GDP, economic growth, and national debt also play crucial roles. The level of economic awareness among the population, reflected in their real estate decisions, is relatively low. Notably, even record-breaking currency exchange rates in recent times have failed to exert a significant impact on the Hungary Housing Market.


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Foreign Buyers in the in Hungary Housing Market

Following the growth observed in the second quarter of 2022, the proportion of foreign buyers in the domestic housing market remained elevated, reaching 6.4% nationally in the fourth quarter of 2022. The most active purchasers are Chinese investors, although their share decreased from 36.3% in 2021 to 31.5% last year. The proportion of Ukrainian buyers increased by 2.5 percentage points compared to the previous year, making Ukrainians the fourth largest group of property buyers in Hungary in 2022.

There is a significant number of buyers from neighboring Slovakia, Ukraine, and Romania in the market. Israeli investors’ share increased by 2 percentage points to 7.41%, with citizens of the United Kingdom acquiring properties in Hungary at a rate exceeding 5% last year. The majority of German, Dutch, and Swiss buyers are purchasing holiday homes, considering their retirement years.

Our dedicated team is here to guide you through every step of real estate investment in Hungary Housing Market. Please feel free to contact us via email info [@] gurcanconsultancygermanyugg.sg-host.com

Sales Time and Negotiation Scope

The Hungary Housing Market has seen a decrease in overall market activity, yet this hasn’t impacted the sales time of concluded transactions. In the first quarter of 2023, the time required to sell residential properties in the Hungary Housing Market decreased from 2.7 months the previous year to 2.3 months. It’s essential to note that these analyses exclude unsellable, overpriced properties that linger on the market, thereby inflating their proportion and expected sales time. Despite the market’s slowdown, the scope of typical negotiations has increased, and asking prices are being more significantly reduced during the advertising period. The typical negotiation scope ranges from 5-8%, but in the case of overpriced properties, a price adjustment is necessary before initiating negotiations.

Hungary Housing Market
Hungary Housing Market

The Rental Housing Market

The rental housing market is experiencing excessive demand, further fueled by the low number of property transactions. Although the annual growth rate of rental fees has moderated between September 2022 (24.2% in Budapest, 22.4% nationally) and March 2023, it still remains high, with a 19% increase in Budapest and an 18% increase nationwide in the annual growth rate of rental fees for available apartments. Even in the suburbs of Budapest, which used to be the most affordable, the average rental fee has reached two hundred thousand forints. In the rental housing market, a state rental housing program could be helpful, as well as improvements to the outdated legislative and enforcement systems.

At Gurcan Partners, we are dedicated to guiding you through the intricate legal procedures and latest updates involved in acquiring real estate in Hungary. It’s crucial to note that legal representation is mandatory for property transactions, especially for non-EU citizens, who also require specific permits. Rest assured, our team is here to assist you throughout the entire process, ensuring a smooth and compliant acquisition. If you have any inquiries or need further clarification, please don’t hesitate to reach out to us at info[@]gurcanconsultancygermanyugg.sg-host.com via email. Your investment journey in Hungary starts here with expert legal support.

You may also check out our other article on the Permanent Residency Program Through Real Estate Investment in Hungary 2024.

Explore our additional articles on Hungary:
14 Steps of Company Formation in Hungary by Foreigners
Company Registration Steps In Hungary
Buying Property In Hungary
Company Taxation In Hungary, “KATA” Start-Up Friendly Taxation
Taxation In Hungary, Taxes, Social Security
Company Setup In Hungary, 5 Good Reasons To Start

 

Feel free to reach out to us through the following contact information:

E-MAIL: info [@] gurcanconsultancygermanyugg.sg-host.com

Gurcan Partners Hungary Office
ADDRESS: Westend Business Centre, Váci út 22-24, 1132 Budapest/Hungary

TELEPHONE: +36 1 808 94 49