2020 brought fundamental changes to the real estate market in Hungary, which are the results of not only the global pandemic but also several other factors. Let’s see how these affected real estate prices and trends.
The real estate market already started to slow down in 2019, and the COVID-19 pandemic that struck in 2020 just put a cherry on top, Forbes reports based on a survey by ingatlan.com.
Prices
Demand dropped by 40-50% during the first wave, and it more or less normalised by autumn. Real estate prices dropped everywhere from the capital to smaller cities and towns all over the country – a trend which Daily News Hungary already reported about. Please see our previous pieces on the topic.
- Do you want to buy an apartment in Hungary? This is your time!
- What’s next? Further price decrease can be expected in Budapest’s real estate market
On average, m2 prices have decreased by 5.8% in Budapest and by 6.4% in the countryside in 2020. Interestingly, prices went up by 4.2% in the county seats, where the average m2 price is now approximately EUR 1,065 (379,000 Ft).
The average m2 price in Budapest was EUR 2,000 (722,000 Ft) in February 2020, and it dropped to EUR 1,915 (681,000 Ft) by December 2020.
Since foreign tourists disappeared, there was little to no need for short-term rentals in downtown Budapest, which led to a drastic drop in rentals. This is the opposite trend to what was observed in 2019, the so-called “Airbnb effect,” which helped push rent prices up a year ago, and now it achieved the opposite.
Decreasing rental prices was the set trend by the end of autumn 2020. This affected real estate purchases for investment since it was no longer a good deal to buy to rent. Therefore, the market was ruled by home buyers this year.
What to expect next?
Experts say that extreme fluctuations are not to be expected. The real estate market has reached certain stability. They also predict a boom for 2021 thanks to the various state housing aid programs that have been introduced.
Source: Forbes.hu; Ingatlan.com
3 comments
What to Expect next ???
The answer given, in particular, the expression of “Boon” for 2021, what planet are these supposed experts from ?
They are talking from their own positions in the property market sector.
They are missing out – badly – on their large and generous percentages of commission on the sale of property under their engagement – that they receive.
They will, in a “fire storm” talk the property market up.
There talk is centrally focused on their pockets – commission, what’s in it for them.
The novel coronavirus, on-going, the “lagging” economy, growing un-employment, winter months – no tourism, the list Factually – you can compile – blatantly HIGHLIGHTS – the principal reasons, why there certainly, not for 9 to 15 months – will there be a solid stabilization trend or base witnessed – in the real estate property market, in Budapest, Hungary.
Pre February 2020 – all the indicators were in a decline trend of prices in Property in Budapest, Hungary, the market was softening.
Simple reason, the – OVER Supply – of Properties for Sale on the Market.
There was a dangerous – distortion – imbalanced – ratio of properties for sale to Buyers.
This dangerous distortion has continued to widen since March of 2020 – as greater numbers of Flats -Apartments and Houses, include new Hotels – have been completed and now are on the market – For Sale or Rent.
The property market is massively and dangerously Top Heavy – with the numbers of real estate properties – For Sale or Rent – as opposed to BUYERS.
This, inclusive of examples referred earlier in this comment, is the FACTUAL reason why there will be no BOOM in 2021 in the real estate property market in Budapest, Hungary.
@Gary – what also has to be factored in is that there is an oversupply of new builds (which are invariably overpriced and with small room sizes): these are having the biggest drop and that distorts the overall market figures. Flats in Classical buildings (pre WW1) in good neighbourhoods are holding up quite well in price terms and saleability.
I think that the market, especially in the center of Budapest, was fueled by the short time rental demand. The abnormal high yields (sometimes over 10%-15%) attracted lots of foreigners as well as Hungarians investors to the market. The properties were priced by a lower discount rates (6%-7%) resulting in a leap in the prices in 2018/9. Part of the investors don’t “suffer” from deep pockets and hence now, when short term income is practically zero, are in a bit of a panic how to return the loans if those hard times continue.
My forecast for 2021 is, that unless we see a dramatic change in the tourist trends that will restart the market, I foresee a chance of a dramatic price drop around Q3/21 and on.