Surge in foreign investors expected in Hungary’s real estate market

An analysis conducted by ingatlan.com indicates that in 2024, a surge of foreign investors may emerge in the Hungarian real estate market due to a new regulation. This could impact residential properties priced at more than EUR 500,000.

There was a 27% drop in the volume of real estate investment transactions in 2023 compared to 2022. The reason behind this drop was mostly because of the inflation and the increase in raw material prices in the construction sector. The cost of capital has increased, and there is still a wide gap between buyers’ and sellers’ expectations. According to Portfolio, a slow recovery in the real estate market is forecast from the second half of 2024 to 2025. The recovery of the real estate market could be one of the reasons why the government chose to change its regulations.

The analysis shows that the interest in residental properties for sale in Budapest, within the price range of HUF 200-500 million (EUR 520,000-1.3 million), increased by 16% in January compared to a year earlier. However, in the county seats, the increase was 25%. Meanwhile, a decline was seen in the top category of properties between HUF 500 million and HUF 5 billion (EUR 1,3 million – 13 million), according to Telex.

According to another analysis which was conducted by Duna House, real estate prices increased by an average of 10% last year compared to 2022. The average price per square metre of real estate in six districts of Budapest reaches HUF 1 million (more than EUR 2600), while it takes 11.7 years to buy a large apartment in the Hungarian capital. Nevertheless, the rental market situation in Budapest, which be could affected by these new changes by the government, is experiencing a significant surge. Various factors also play a crucial role in shaping rental prices in the Hungarian capital.

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The reason behind the increase

Behind the move is the new legislation that allows non-EU residents to obtain a visitor investor visa. This can be achieved by either purchasing residential property for at least EUR 500,000 or buying at least EUR 250,000 worth of units in real estate funds registered with the central bank, according to László Balogh, an economic expert at ingatlan.com.

“Similar regulations are in place in several EU countries. In Hungary, the minimum threshold for buyin a home is EUR 500,000 (HUF 190-200 million) which covers the upper end of the domestic property market. There are currently more than 8,500 residential properties on offer that meet these criteria,” László Balogh stated. According to their data, most foreign home buyers continue to come from EU countries. Among the non-EU locations, the US, the UK, Turkey, Indonesia and Switzerland received significant number of inquiries for residential properties for sale last year.

The situation in the real estate market is looking good since the number of people interested in properties at the price range of HUF 200-500 million in Budapest rose by 16% year-on-year, and by 25% in the county seats. Meanwhile, smaller towns and villages, where there are relatively few such properties, have seen a decline, according to Portfolio.