Revealed: This is what’s really driving up Hungarian property prices

Property prices in Hungary experienced a marked upturn in the second half of 2024. Capital that had previously been tied up in government bonds once again flowed into real estate, primarily due to fears of imminent price increases. Investors felt compelled to act swiftly, aiming to purchase before prices climbed further – a move that, in turn, helped drive up prices before the year’s end.

A significant proportion of buyers entered the market not for personal use but in the expectation of returns. The aim was clear: to purchase property swiftly, ahead of the next wave of price hikes, in order to realise a 10–15% increase in value. According to Pénzcentrum, this trend has been reinforced primarily by investors who had earlier shifted their assets into government bonds, but now regard property as a more secure long-term investment.

What’s driving the Hungarian property market?

A new factor has also energised the market: reports of pension fund savings being redirected into real estate. This information spread rapidly and had an immediate impact on rural investors seeking properties to rent out. This sudden surge in interest further fuelled the buying frenzy, particularly in the lower-priced segment.

Although cash buyers are generally welcomed by sellers, in reality these buyers are often in a weaker bargaining position. They aim to purchase quickly but at a reduced price, meaning the seller receives payment sooner but frequently below expectations. Therefore, cash purchases do not necessarily translate into higher profits for vendors.

Budapest or the countryside?

In Budapest’s inner districts – especially the 6th district – market dynamics have taken a different turn. Stricter Airbnb regulations have deterred investors interested in short-term rentals, and residential buyers have become dominant. The number of investment-driven purchases has dropped significantly, and those still seeking investment properties tend to focus on smaller, more affordable units.

Beyond the capital, investors are increasingly eyeing the Lake Velence and Lake Balaton areas. Demand has surged for everything from small flats to building plots around Lake Velence. Buyers in these regions tend to be well-informed regarding prices and taxation and often pay in cash.

At Lake Balaton, more and more people were looking for plots of land that could be built on, for smaller development opportunities. The aim here was not only the classic rental business, but also the development of modern accommodation, which has great potential with the continuous growth of tourism around the lake.

All indications are that investor activity will not decrease in the near future. As competition between savings vehicles shifts, real estate will remain an attractive alternative for those who want to keep their capital safe. Price rises are also expected to continue to fuel demand, especially in strategic locations such as certain districts of Budapest or major waterfront regions.

Stay informed! Read more about Hungarian real estate HERE!

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