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.
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.
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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