As a result of the pandemic, the Hungarian real estate market has undergone several changes like dropping real estate prices and the realignment of the previously profitable property investments. Let’s see what this means in European comparison and what can be expected in the near and distant future.
In 2020, home prices in European countries continued to increase. According to the housing market price index of Eurostat, in spite of the coronavirus, price increases were observed in the majority of European countries.
During the last quarter of 2020, only the Spanish and Hungarian housing market indices decreased by 0.8% and 1.4%.
As the Hungarian news portal Portfolio reports, the most significant price increase could be observed in Luxembourg (4.7%) and Cyprus, where the rapid rise in prices was a correction of a similar decline. They were followed by Lithuania and Estonia, where the price increase was almost 4% by the end of 2020.
Just like most European countries, Hungary has also started to ease the pandemic restrictions – restaurants, cinemas, theatres, gym, and other services have reopened; however, for the return of foreign tourists, we still have to wait a bit.
The revival of tourism can significantly impact property prices which may also affect the downtown of Budapest and the real estate market of the party district. According to the expert, after the pandemic, many people may choose places far from the crowds and cities as their travel destinations, and the demand for semi-natural locations will increase.
Accordingly, short-term properties providing the opportunity of isolation might gain more popularity in the future.
One of the biggest questions is whether the former image of the party district of Budapest and the function of the entertainment centre will manage to revive or transformed in the long run, which may also affect the development of demand for the previously booming Airbnb services.
The district-level regulation of short-term rentals already started in 2019, but it temporarily stopped with the outbreak of the pandemia. So far, the framework of the regulation was completed only in the 6th district of Budapest.
In addition to tourism, the housing preferences might also change.
By taking advantage of the currently available subsidies, buyers will prefer to build larger, family-friendly apartments in the city’s centre rather than small apartments for short-term rentals.
The cyclical nature of the real estate market in home choice preferences can be observed in Hungary since the 1990s. At that time, the expansion of the agglomeration was replaced by high-quality investments and developments in the 2000s, mainly in the 6th, 7th, 8th, 9th and 13th districts of Budapest. As a result, high-quality newly built properties appeared in the inner districts of Budapest, becoming more attractive to live in the city centre than before.
The end of this period was 2017-18 when – due to the costly housing prices in the downtown – the age of the suburbs and the agglomeration began, which was further intensified by the coronavirus. However, it might happen that in 10-15 years at the latest, the city centre may once again become the leading destination for home buyers.
According to the Hungarian news portal Világgazdaság, it can be observed that nowadays, the suburbs are becoming more expensive, and the margin is declining between the suburbs and the city centre. However, the demand for real estates in downtown might increase again in the future.
As a result of the pandemic, rental prices have fallen significantly; however, according to the latest data, a slight increase can be observed compared to the December drop. Still, likely, the previously skyrocketing prices of the Hungarian real estate market will not return soon.
According to the expert, the upcoming summer will answer several questions regarding the real estate market development.
Source: portfolio.hu; vilaggazdasag.hu