Budapest Real Estate Market
Foreigners have invested in real estate in Budapest a long time ago, including the Russians – most of those who purchased housing in the Hungarian capital more than five years ago now reap the benefits of their investments, since local property prices have doubled since then, and in some areas even several times.
Budapest is a popular tourist resort town, known for its unique architecture and thermal baths, high level of service and a variety of cultural programs. Also, the Hungarian capital boasts an excellent climate and environmentally friendly products. The city is famous for being a large student center due to the high level of education of world-famous local universities.
The main buyers of residential real estate in Budapest continue to be local residents: they are actively buying housing for both their own residence and as an investment. Airbnb service thrives here, there are many hostels that bring good income to their owners, and apartments for long-term rent are no less in demand. If we take into account that bank interest on deposits in Hungary rarely reaches 2.5%, then real estate investment is a very wise decision.
The increased interest in real estate in Budapest is strongly associated with an increasing flow of tourists every year, so both locals and foreigners are actively buying real estate for further rental. According to some experts, the passive income from renting Budapest housing for daily rent can reach 10-12% per annum. If the owner wants to use the services of a management company, then his income will be about 8% per annum. The most active investors today are Italians, British, Chinese, Irish, Germans, Arabs, Israelis and representatives of the CIS countries.
Today, the trend of rising prices in the Hungarian capital continues and spreads from the center to the periphery, increasingly capturing and very remote areas of the city. There are skeptics in the local real estate market who believe that the current situation resembles a soap bubble, but most experts cannot agree with this approach. After all, property prices in Budapest even before the crisis could not be called low, but due to the unstable situation in the world, they collapsed and the Hungarian government took rather wise steps that led to the fact that most of the facilities were frozen for an alarming period of time. Precisely because the construction process was stopped, there was no excess of offers on the market, due to which, when the crisis was over, prices began to rise to their “historical level”.
New buildings are now very popular in the housing market of Budapest. Modern construction technologies, original solutions for the organization of space, equipment of the latest generation attract great customer interest. In addition, residential complexes are being built not only on the periphery of the city, but also close to the historical center. However, interest in apartments in houses of the old classical Austro-Hungarian construction does not fall, thanks to which Budapest remains one of the most beautiful cities in Europe. As for the interior design of residential premises, the trend continues to remain minimalism.
The Hungarian government actively supports young families in their plans to acquire real estate – a financing scheme has been created to help families cope with this task. In addition, developers received great benefits: from 27% to 5% reduced VAT on the construction of new housing. And, given the temporary pause of past years in housing construction, one can imagine how the interests of the parties-builders-sellers and buyers are balanced now. On the one hand, it became possible to build with 5% VAT, and on the other, the possibility of acquiring real estate with the use of a financial scheme to support young families increased.
By far the highest income can be enjoyed by becoming the owner of real estate having a sought after location – this is the historical center of Budapest. The 5th district, although the whole is part of the historical part, but it is not so easy to obtain a permit for surrender, due to the large number of government institutions, including the famous Hungarian Parliament. Also in demand are the neighborhoods of the 6th, 7th, 8th districts of the city inside the boulevard ring, as well as part of the 13th district, directly adjacent to the 5th district.
These days, the full-scale rehabilitation of the 9th district of Budapest, which is adjacent to the 8th district and located along the Danube, also begins. Due to its proximity to the river, there used to be many industrial zones abandoned since the post-Soviet era, a lot of old housing stock, which could not contribute to high real estate prices.