What’s next? Further price decrease can be expected in Budapest’s real estate market
Several market participants are looking for the answer to how long the decline in real estate prices will last in the downtown of Budapest. The answer is quite complex, as it is influenced by numerous external factors that need to be considered. Still, according to experts, an additional 10% drop can be expected by next summer.
According to Ben-Ezra Orran, expert at Central Home, the current situation can be examined from two aspects. “One is the phenomenon of the pandemic and the virus itself, as the current restrictions narrow the scope for maneuver in all sectors of the economy, including the real estate market in Budapest and the city center. The other aspect is the actions of the government and the MNB to try to support the market and balance or stabilize the negative effects.”
As the Hungarian news portal Piac&Profit reports, the pandemic has caused drastic changes in the real estate market throughout the year: there was much less movement in the downtown of the Hungarian capital, as well as a significantly smaller group of active buyers and investors could be experienced. The primary reason for this is that while in previous years a large number of foreign investors were present in the city center, they are now physically barred from traveling here. That is why this buyer group has completely disapperaed from the market. In addition, the general uncertainty factor, the decline in the confidence index and the stagnation of investor sentiment have obviously pushed prices down.
For understandable reasons, fewer and fewer are now daring to take risks, which is having a negative effect on the market.
According to the expert, it cannot be predicted how long the economic difficulties will last as conditions change dynamically day by day, week by week. Based on the data of the Central Home’s team of experts, there will be a “W” shaped crisis. Presumably, by the spring or possibly summer of 2021, the price of certain types of real estate will continue to decline. And this could mean a price drop of more than 30% compared to end-2018 prices.
Given the current market conditions, it is believed that even a further 10% price drop can be expected in the upcoming months in the Budapest market.
Read also:
- Check out how much flats in Hungary cost!
- Real estate & home loans: shocking differences between Budapest and other big cities
Source: piacesprofit.hu
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1 Comment
Faced with still the un-certainty of the catastrophic disasters across the entire economy of Hungary, that this novel coronavirus has inflicted, it’s “zenith” of impact, not within sight, the property market of Budapest, Hungary will continue to go lower in values for the next 9 to 12 months.
What is lower ?
Use the “mean” property market range pre the outbreak of this novel coronavirus February 2019 and prior, and as an indicator and adjust that from the “mean” by less 22% to 25%.
This is the range – my opinion, before signs of stabilization is seen again in the property market in Budapest, Hungary, that will be witnessed.
We know the (3) principal buyers of properties for occupancy by them-selves or rental investment purpose.
They are :
(1) – China.
(2) – Vietnam.
(3) – Germany.
Investors from these (3) three would be patiently waiting for the property market to bottom out.
They will be cashed up, and purchase, when the time is right, on-going large portions of Hungarian real estate, removing it, from title, as a Hungarian owned piece of property, into foreign ownership.
China is rapidly returning in its economy to normality, coasting along with a growth rate of near 4%.
Vietnam and Germany not as vibrant of course to China but the signs are there, although Germany is “hovering” but the strong fundamentals of there economy present optimism, that they will maintain a stabilized holding economic position, that will see growth return, in the coming 6 to 9 months.
Vietnam – the case numbers of this novel coronavirus – they have been extremely fortunate – and let us hope it remains that way.
The property market in Budapest and Hungary prior to February 2020, was in a large over supply position.
If this novel coronavirus had not descended into our lives, into Hungary, changing our lives, changing the world, the economic functions and mechanics the world was using in its core of existence, the real estate property market in Budapest, Hungary was going to experience a rapid downward trend in property real estate value.
Why ???
Answer – over supply, number of properties for Sale or Rent.
The compounding Danger was the dangerous distortion – active buyers to actual properties on the market for sale or rent – over supply.
This in itself was going to force value of properties down, in Budapest, Hungary throughout the summer of 2020.
Patience – watch our economy in Hungary very very carefully, and China, Vietnam and Germany – and when the inoculation is under way in ALL these countries of the vaccine to immunize us against contacting this deadly novel virus, and peoples spirits and confidence starts to re-appear, economies move on the up-side, – then blow the dust off those cheque books and buy.