New property purchase rules in Hungary: can locals ban non-local residents from buying in?

In recent years, Hungary’s real estate market has experienced significant growth, particularly in smaller towns and villages. This surge is largely driven by urban dwellers seeking a quieter life and foreign buyers attracted by the country’s strategic location. However, this trend has also raised concerns about preserving local identities and managing rapid population changes. To address these issues, the Hungarian government is exploring measures to regulate property purchases, potentially allowing local councils to limit sales to non-residents.

The rise of the real estate market

The real estate market in Hungary has seen a remarkable increase, especially around the Balaton region and in areas near Budapest. These locations have become popular due to their scenic beauty and proximity to urban centres, leading to a significant rise in property prices. For instance, between 2015 and 2023, some areas experienced price increases exceeding the national average of 209%, G7 reports. This rapid growth has made it challenging for locals to afford homes in their own communities, leading to concerns about cultural and demographic shifts.

Identity protection measures

The concept of “identity protection” aims to empower local councils to manage these changes by introducing regulations on property sales. According to Telex, the proposed measures include restricting purchases by non-residents, extending pre-emption rights, and linking property purchases to residency requirements. These steps are intended to preserve the cultural and social fabric of smaller communities. However, the implementation details remain unclear, and it is uncertain which towns will adopt these measures.

Economic and social effects

While these regulations could help maintain local identities, they also pose economic risks. Limiting real estate sales could reduce investment and slow economic growth in affected areas. On the other hand, initiatives like the “falusi csok” (rural housing support) aim to encourage people to move to rural areas, which could counterbalance some of these effects.

Different regions face unique challenges. The Balaton area has long struggled with tensions between locals and newcomers, while the Budapest agglomeration deals with overpopulation and high demand for housing. The eastern border regions are experiencing increased interest from Romanian buyers following Romania’s Schengen accession, which may further boost local markets.

Hungary’s real estate market is at a crossroads, with government measures aiming to balance economic growth with social and cultural preservation. While these efforts may protect local identities, they also risk stifling economic activity in smaller towns. The outcome will depend on how effectively these regulations are implemented and whether they can strike a balance between preserving community character and fostering economic development.

Read also:

• Buyers shocked: Budapest real estate market gone crazy, price of second-hand flats sky-high
• Cross-border housing trend: Romanians look to Hungary for cheaper property

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