Hungary has one of the largest price gaps between renting and buying in the world

New research reveals that Hungary has one of the largest price gaps between renting and buying in the world – mortgage payments are 40.90% more expensive than rent.

The research by Compare The Market analysed average house and rent prices in OECD countries to reveal the countries which have the biggest price gap between rent and house prices.

You can view the research in full HERE

The 10 countries with the biggest gap between house prices and rent

Rank	Country	Average rent (three bedrooms)	Estimated monthly mortgage payment	Difference between house prices and rent
1	Luxembourg	$3,017	$4,558	51.1%
2	Latvia	$582	$830	42.5%
3	Slovakia	$771	$1,098	42.3%
4	Portugal	$1,005	$1,419	41.2%
5	Hungary	$583	$822	40.9%
6	Russia	$746	$1,045	40.1%
7	Czech Republic	$861	$1,205	40.0%
8	New Zealand	$1,656	$2,234	34.9%
9	Germany	$1,414	$1,887	33.5%
10	Canada	$1,597	$2,118	32.6%

Luxembourg ranked highest with a staggering price gap of 51.1%, reflecting the high cost of living. Luxembourg also has the highest rent and house prices on average with rent costing $3,017 a month, paired with a steep estimated monthly mortgage payment of $4,558.

Latvia came second place with a substantial gap between rent and house prices of 42.5%. While house prices in Latvia are much cheaper than those in Luxembourg, it has a similarly high gap between the cost of renting and buying. This means that, with an average monthly rent of US$582, average monthly mortgage payments are estimated at around US$830.

Read also: The prices of new flats in Budapest set a historical record!

Slovakia comes in third with a 42.3% difference, just behind that of Latvia. House prices have been on the rise in Slovakia over the last few years and with an average rent of US$771, the average monthly mortgage payment is estimated at just over US$1,000.

Further insights:

On the opposite end of the scale, South Africa held a 0.8% price difference with rent prices averaging at $865 and the average mortgage payment being $872.
Two countries also held negative price difference percentages, with Finland and Italy having cheaper house prices overall than rent.

Methodology

The research is in US$.

The house price to rent ratio for each country was sourced from OECD and is calculated by dividing the nominal house price index by the housing rent price index from the same source. For example, a ratio of 151.1 means that house prices are 51.1% more expensive than renting.

The average rent for a three-bedroom property in each country was calculated by averaging the average cost of renting a three-bedroom property both in and outside of city centres, according to Numbeo.

Average monthly mortgage payments were then estimated by multiplying the house price to rent ratio by the average rent.