Shocking housing market trends: foreign renters drive up prices in Budapest?

A recent assessment reveals the distinct housing market preferences among younger and older nationals, as well as between foreign and Hungarian residents. Tenants under the age of thirty prefer to live in the inner city, while the elderly tend to gravitate towards the outskirts. On the other hand, foreign tenants demonstrate a higher rental budget, which conversely drives up prices within Budapest’s central districts.

According to Pénzcentrum, a third of tenants renting via the real estate agency Otthon Centrum are under thirty, with a majority expressing a preference for central Budapest. In fact, one-third of all young renters opt for city centre living, while others mostly choose major urban centres across Hungary. In contrast, older renters typically seek accommodation in suburban areas.

In terms of overall tenant demographics in the Hungarian housing market, only 25 percent choose downtown Budapest, with 20 percent favouring other major cities and 16.5 percent residing in Buda. Approximately 10 percent pick the outer districts of Pest.

Foreigners in the housing market

In the last half a year, Otthon Centrum saw an approximate 4 percent rate of foreigners among their customers in the Hungarian housing market, most of them being Russians (almost 30 percent) and Iranians (17 percent). Around 11 percent of their tenants are Ukrainians and Egyptians, while there are also Austrian, Portuguese, Polish, South Korean and Israeli nationals renting in Hungary.

When it comes to their housing market preferences, foreign tenants prefer brick apartments in inner Pest or Buda, seldom venturing into the agglomeration. Moreover, they tend to allocate significantly higher budgets for rent compared to locals, with an average monthly rental expenditure of HUF 313,000 (EUR 787.96), surpassing the Hungarian average of HUF 213,000 (EUR 536.22).

Rent prices rising in Budapest

“Budapest is flooded with foreign tenants: it is no wonder that apartments are hard to find, and they are expensive too” – Pénzcentrum titled their recent article on the matter. Indeed, as we reported in February, The Economist identified Budapest as the most expensive European city for single-occupancy flat rentals.

While The Economist suggests that rental expenses should not exceed 30 percent of an individual’s gross income, Budapest surpasses this benchmark and has recently been labelled the most unaffordable city for those renting a place alone: the average income in the capital is barely half of what would satisfy this 30 percent criterion.

As Pénzcentrum further reported, rental prices in the capital soared to 190% of 2015 levels in February 2024, particularly in sought-after districts such as II, XI, and XIII, where rents averaged between HUF 240,000 and 335,000 (EUR 603.93 – 842.99) per month.

However, experts predict a potential slowdown in the rate of increase, as evidenced by a decrease in rental price inflation from 20 percent to 11 percent over the past year, with January and February of 2024 recording modest price hikes of 2 percent and 1.1 percent in the housing market, respectively.

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Source: Pénzcentrum