Fewer foreigners buy real estate in Hungary – will the market crash?

The current economic crisis has its strains on the housing market too. There are fears that a 2008-like crash in the market might happen soon. In the meantime, the share of foreigners buying housing in the country is also very low. How realistic are these concerns? Where do foreigners buy housing and what are the usual tendencies among the customers?

The housing market has been not driven by foreign customers lately. From the recently published data of Otthon Centrum, we can get a better understanding of the behaviour of foreign customers — reports ATV.hu. By the information about the first nine months of the year, it is known that only 2 percent of customers are foreign citizens. Among them, the largest share is made up by Germans at 25 percent. They are followed by Slovakians at 10 percent and then come Ukrainians at 9 percent. There was a rise in Ukrainian customers, as they are fleeing the war in the country.

Other ethnic groups make up a negligible percentage of the customers. However, there are buyers from all over the world from Asia to Africa. There were customers from Nigeria, Algeria, Iraq, Iran, India, South Korea and China. Chinese people only make up 3.7 percent of the customers.

Tendencies

Most customers are buying housing in the capital, Budapest. In the city, the 13th and the 7th districts are the most sought-after. Other than Budapest, Zalaegerszeg is a popular city. However, only 3 percent of foreign customers want to buy properties there. Most of the transactions are made with cash. Only 10 percent of foreign customers take up loans to pay, while this rate is 30 percent among Hungarians. HUF 42 million (EUR 105,000) is spent on average for the properties. What is surprising is that 2/3 of foreign customers are men, while the gender balance is more equal among Hungarians. Also, houses are the preferred property type, instead of apartments.

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Will the market crash?

At a conference of Ingatlam.com, Ákos Balla discussed this issue. While there is certainly a bubble in the housing market, he does not think that it will burst, rather it will deflate. The growing trends until 2021 will definitely come to an end, however, a 2008-like crash is highly unlikely. The housing market will not crash, but it will become more balanced. As fewer people are buying real estate, the supply will go up and prices will be moderated. The main problem he pointed out is the lack of financial support options for customers. Ultimately, the housing market will stabalise, creating a much better environment for the sector.

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Source: Ingatlan.com, ATV.hu