Apartment prices continue to rise in Hungary
According to the experts of the Rock Home real estate agency, the increasing of the apartment prices will continue in the next year, thus, small apartments are more ideal as an investment and people are less likely to negotiate about prices in the housing market.
If the forecasts prove to be true, then the prices of the housing market will continue to rise; the average price of apartments will increase by 4% in the next year – Forbes.hu reported about the press release of Rock Home real estate agency.
Marcell Kövesdi, the owner and manager of Rock Home says that the housing market is stable, there are no signs of recurrence, but because the
prices have increased – by 12% in the last year –
due to the large demand for apartments in the first 3 quarters of the year, the risk overvaluation has increased in the capital and other larger cities.
The increase in prices this year and in the future is due to the 12.8% increase of the incomes in Hungary, which are likely to increase next year as well. The other main reason for the increasing prices is that the government will broaden the field of those that can requisition the family housing allowance. Although the broadening will affect families with two or three children that live in lesser cities and in the countryside due to the fact that the government will extend the allowance for families with two children, they can requisition an allowance of 31,000€ (10 Million Ft) and they increased the allowance to 47,000€ (15 Million Ft) for families with three children.
“Since the crisis in 2008 the housing market went through a major advancement and it is clear that the momentum will not even break in 2019” – said Marcell Kövesdi.
You can read our article about the increasing demand for newly built apartments.
According to the data, a second-hand 50 square metre apartment in a condominium costed 25,300€ (8.1 Million Ft) in 2008, the price increased by 45% since, the same apartment now costs 37,500€ (12 Million Ft). The average price of a brand new 50 square metre apartment has increased by 37% in the past decade; they sell for 64,000€ (20.5 Million Ft) right now. This year, over 165,000 apartments were sold, which is a 5% increase compared to last year and the average price increases from 41,250€ (13.6 Million Ft) to 44,375€ (14.2 Million Ft).
The increase is gaining momentum
It has to be noted, that these data are often just informational, as there are huge discrepancies between cities and villages and between regions. In the capital and cities where the car industry is present, the increase is much faster than it would be in the countryside;
the apartment prices increase by 16-20%.
The data show, that the increase has sped up in the capital and other bigger cities, while in the municipalities, the increase has slowed down. The increase rose from 16-20% in Budapest, 13.3% to 16.3% in other major cities, and decreased from 16.9% to 11.8% in the municipalities.
No more than 40 for investors
Marcell Kövesdi suggests for those to wish to invest, that they should consider that although the income of people has increased in the past couple years, people usually need to work more for an apartment than previously.
By analysing data, it is clear that in order to buy an apartment, the number of yearly average income in order to buy it is higher. In order to buy a 65 square metre second-hand apartment for full price, 5.4 years of average income is needed, in Budapest, the 2018 data is 8.9 years, in 2017 these were 5.2 and 8.2 years of average income respectively. For a new apartment, the numbers are even scarier; 10.7 years in Budapest, it was 10 years in 2017, in other parts of the country it is 9.4 years, but it cost only 9 years of average income.
Marcell Kövesdi highlights that investors should only really consider buying a 40 square metre one to two-roomed apartments. The location of the property is also important because it can determine the clientele.
The dangers of criminals who take advantage of inattentive elderly people should not be underestimated.
Hagglers should spare
According to the experience of the real estate agency, buyers are looking for the more inexpensive apartments with more rooms. It seems as if the demand for properties in Budapest is unlimited; there is no flat that is unsaleable, but this increases the risk of overvaluation.
There is a new trend where instead of reducing the price of the unsold apartment, they rather increase the target price. Bidding is also expanding, 5% of transactions sell the property over its target price.
The aspect of negotiating has also changed. While previously the buyer was able to bargain 5-6% of the apartment’s price, now it is only 2%. Either buyers became worse at haggling, or sellers are more adamant than before.