According to index.hu, the 5th district has always been one of the most popular regions of the city regarding the estate market, still the past couple of years were characterised by an outstanding development. But what are the reasons behind the phenomenon and what kind of tendencies can be expected on the downtown estate market?
The 5th district is the inmost district of Budapest and the most central city part. Consequently, estate prices are quite high there. The main reason is that it is a touristically unique region, since many sights – like the Parliament, Chain Bridge, Danube promenade and Váci Street – are found there. Also, properties became extra-popular in the past years due to the AirBnB business.
Based on the data of ingatlan.com, the September estate prices in Budapest grew by 20% between 2015 and 2016. Even though the growth dropped to 16%, the boom was sensible in the past year as well. This might be shocking if we take a look at square metre prices. The Budapest average is currently 509 thousand forints (~EUR 1643), but this rate is 863 thousand forints (~EUR 2786) in the 5th district. This means a huge difference between the districts of the city.
Only an outstanding demand can keep the prices this high.
“Besides residential estates, business-premises and basically any spot is worth a fortune in the city centre” said László Balogh, the economic expert of ingatlan.com.
This marks the beginning of a new era on the estate market of Budapest. The properties of Buda used to be in the leading position, but this has changed. Today, square metre prices decrease as we go farther from the city centre, expect for a few quarters that got dearer due to the party tourism and ruin pubs.
Besides the general growth of the estate market, the appearance of short-term renting had a direct effect on the district, which draws more profit from the business than any other district. The central location and the high standard estates form a perfect combination, which attracts the attention of tourists, who are willing to pay for quality.Photo: www.facebook.com/MándiFerencPhtgrphy
The area went through great developments in the second part of the 19th century, especially after the Austro-Hungarian Compromise of 1867. Most of the properties are monument-like listed buildings which remained in good condition contrarily to the ones found in other central districts.
Newly built apartments mean something different in the 5th district.
The knocking down of old buildings is very rare, companies rather restore buildings or renovate the interior. A beloved technique is the reconstruction of the attic area, this way amazing penthouse apartments are created on the top floor of buildings. A good example of this is the Emerald Residence, soon to be inaugurated at Szervita Square. The panorama and the price level are both unbelievable: the square metre prices of these newly built apartments start at 1.7 million forints (~EUR 5490).
This probably seems like a lot, but it is still under the international average. For instance, a similar downtown estate’s square metre price is around 15-25 thousand euros in Vienna. Naturally this signifies luxury, therefore it’s no surprise that based on the survey of the National Bank every 4th-5th buyer is a foreigner.
Market actors are more and more active since the increase of prices entices old owners to sell their properties. The whole selection counted around 3000 estates in the March of 2015, but this number has grown by 30% since then. This is completely realistic concerning that you could buy a neat family house in Buda for the price of a 40-50 m2 apartment in the 5th district.
All in all, the 5th district remains a profit making engine.
A less dynamic, but still sensible price growth can be expected in the next years. This increase of value is not moderate at all: the district equals outstanding potential, especially compared to the whole of Budapest. Experts predict the coming of an era of investments that are stable in value due to the great demand and limited supply.