Property price increase may stop this year in Budapest
According to hvg.hu, the skyrocketing of property prices may stop in 2018. This is because the number of property purchase is decreasing. As we reported, there was an 18.4pc increase in the prices of Budapest properties in 2016. Also, on a national scale, prices have increased by 10-15pc since 2015.
Price increase may stop
Based on Ingatlan.com’s analysis, property prices increased even in 2017. For example, real estate prices grew by 10pc in Budapest; however, the trend might stop in 2018.
To start with, László Balogh, economic expert of Ingatlan.com said that price increase in itself is not surprising. This is because demand for new and resale flats has not changed. However, two significant changes happened in 2017. On the one hand, more and more property purchases were financed with loans because interest rates were lower than ever. On the other hand, property purchase in Budapest is not increasing anymore. As a result,
dynamic price increase may stop this year.
He added that probably other big cities would become the motor of the property market in Hungary. There the demand is growing, and prices are increasing.
Clearly, one can still experience considerable differences in the country regarding prices. In fact, the average price per sqm in Budapest was 543 thousand HUF at the end of December. This means a 16pc rise since 2016 December. To make matters worse, the increase rate was even bigger in case of tower blocks in Budapest. Here the average price per sqm exceeded 405 thousand HUF (EUR 1,300) which equals a 19pc growth. The analysis highlights that
demand for tower blocks is increasing.
The reason is simple. They are 20-40pc cheaper than brick houses, and they contain more rooms on a relatively smaller area.
Property market is still dynamic
In Győr, the average price per sqm of brick houses increased by 9.1pc to 357 thousand HUF (EUR 1150). Similarly, the cost of tower block flats increased too by 9.6pc to 287 thousand HUF (EUR 922). In Debrecen, these numbers are 10pc and 330 thousand HUF (EUR 1060) regarding brick houses and 12pc and 270 thousand HUF (EUR 870) in case of tower blocks. In Szeged, price increase regarding brick houses was 9.6pc while
it was more than 20pc in case of tower blocks.
According to Ingatlan.com, there were 160 thousand transactions this year taking into consideration even preliminary contracts regarding newly built properties. In fact, 15-20 thousand new houses can be completed this year. Prices are not going to decrease, but the rate of price increase will remain between 5 and 10pc. Of course,
many depends on the type and the location of the property.
László Balogh added that property market would remain dynamic even in 2018. This is because of cheap estate loans, newly built houses and Family Housing Support Program (CSOK). He stated that
market boom regarding dwellings freshly constructed will remain until the end of 2019
thanks to reduced VAT.
Because of price differences, in Budapest CSOK can help mainly families buying resale tower block flats. However, in country towns, it can help even those who aim to buy or build family houses in 2018.