Here is how many years you have to work to afford a flat in Hungary

The Hungarian National Bank (MNB) released its Housing Market Report for this fall. The MNB publishes this report twice ever year to show the data regarding the housing market, family support and loans. This recent report showcases the numbers from the second quarter of this year. Here are the most important findings from it.

Housing prices go down

According to the report, prices of Hungarian real estate have declined significantly. It was the middle of last year when the housing prices stopped going up. Now is the first time since 2014 that the annual housing prices have decreased. Many aspects played into curbing inflation, such as the uncertain economic conditions, the decreasing fair value of wages and the high interest rates. The decrease could be better felt in the countryside and the bigger cities, in contrast to Budapest where there wasn’t a substantial reduction. All in all, considering inflation as well, housing prices have dropped a considerable 18,5%.

Rent it out!

Next to the stagnating housing prices, the rental prices have increased, making the renting of flats more profitable. In the past years, the prices have been driven up by the very profitable outcome of renting out flats, since the owner of the flat gets money both from the house gaining more value, and the rental income. However, housing prices stagnated last year, so the total value of these flats wasn’t increasing further. But the rental prices did. This way, the rental profit increased in the last year with half a percent in Budapest and in the countryside alike.

Aligning investors

The report states that in proportion, the numbers of those who are buying for investment purposes have decreased, aligning with those who are selling their investments. This is due to the potential income from the house not being enough. The savings that would be invested in buying a flat would generate interest much better elsewhere, telex.hu writes. Considering these factors, more people have started selling their flats that they bought as investments. Now, the number of those who are selling and who are buying for investment have nearly converged, meaning that property accumulation has temporarily ceased in Hungary.

Incoming

In Hungarian cities, the decreasing fair value makes it easier to buy a house from income. To measure how hard it is to buy a house from income, they consider a 75-squaremetre flat an average sized apartment and take the average income as base. This is called the home price to income ratio, and in the 2000s, it took 10-12 years to achieve. However, in Budapest in 2019, it was estimated that around 13 years of hard labor would buy people a flat.

Now, in the recent report, this has dropped to 11,7 years. That is when we count by the average paycheck of someone working in Budapest; however, someone from the countryside would have to work roughly 17 years to afford a flat. To see how the Hungarian prices compare to other Member States, in Amsterdam, it takes less than 10 years, in Paris, it takes more than 20 years, and the most shocking is Prague, where it takes around 30 years with a steady paying job to be able to afford a house.

Read more about housing prices in Budapest HERE.

Read more about the house construction sector HERE.

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1 Comment

Lorraine Joseph Franz: says:

21/11/2023 at 11:23

Scary.
The Real Estate explosion that has been in up-ward valuation experienced in Hungary, over the entire 14 years in Government of Orban and his “lot”, that has continually “feed” into by wrongness of policies, that has caused the horrendous widening of the gap, the ability and affordability of Hungarians of ALL ages, especially the first home buyers or younger generation of Hungarians, the future of Hungary, has been SMASHED.
The prioritization practiced put in place by the Orban Government “favoured” encourage foreign investment ownership over Hungarians.
WHY – they had the money in there banks and thus enabled created pushed along, the continual speed up-wards of the values of Real Estate property in Budapest, Hungary.
Hungarians back in time of 14 years, from the outset of the Orban Government, its “favours” encouragement to attract foreign investment over Hungarians, if TRUTH be spoken, the Orban Government knew that Hungarians did not have the financial in-come nor savings to “jettison” explode the Real Estate market to what we know has factually happened, and remains all these years on.
Orban has “jiggled and fiddled” endeavouring to “ease the pain” on first home buyers, the younger generation of Hungarians, making the “getting into” affordability of purchasing a property’s titled to them, there investment in large part – into there future, life,
Corona Virus Pandemic, the Russian War of engagement against the Ukraine, there have been interruptions globally, not just Hungary “scared & damaged” – that have effected impacted on and into the Real Estate – Property Market.
Hungary has been FACTUALLY not acknowledged – not admitted by the Orban led Government, in term of expression, and in a Recession.
What is an amazement, the disappearance of foreign investors into the property market, the BIG (3) three over 14 years being in this order – Chinese, Vietnamese & Germans – is we have BUILT on and on, creating more property’s for sale or rental in Budapest, Hungary.
The property market has “come off” from its highest levels – decreased marginally, and still expected needs to fall lower.
State of the Economy, place of the forint, interest rates, Russian War on the Ukraine, mass un-certainty of Hungary – it’s place – it’s future in the European Union rightly living with funding being with-held, through the Orban Governments abuse of the Laws of European Union Membership, these are MAJOR factors of the CORE of present day Hungary, that are will have humongous on-going impact, on the lives of millions in number of Hungarians and continual somewhat of an on-going carnage in the real Estate Property Market.
Sellers over Buyers – the growing disjointing differential – a BAD sign for the Hungarian Real Estate Property Market.
Where are the BUYERS going to come from ?
We build on and on, renovate on & on – where are the buyers going to come from ?
The political picture of Hungary is of grave concern, the destruction of membership in the European Union, the known and obvious move away, from the core fundamentals of being a DEMOCRACY, to building relationships with country’s of a Dictatorship Government – Russia and China, point to GRAVE deepening un-certain times for Hungary, and millions of its population.
Throughout Europe and the Global World, through driven by led by the present Prime Minister of Hungary- Victor Orban, supported by his Government, by the Political Party he co-created Fidesz, we, this country Hungary, have factually seen, and being damaged by now and into the future, through Orban’s agenda to destroy Democracy, through this wrongfulness – country’s of Democratic Rules – Laws and Order, have disowned abandoned US.
The immediate, into short and long term FUTURE of Hungary, in the landscape, the creation of Victor Orban we live is BLEAK, that grows in being depressive over millions of Hungarians.