real estate

Property and rental prices will boom in this Hungarian city

Property and rental prices will boom in this Hungarian city due to Chinese investment (Copy)

Chinese company BYD has announced plans to construct its latest plant in Szeged. Although construction has not yet commenced, there’s widespread anticipation that property and rental prices will skyrocket in the Southeast Hungarian city. If you’re considering investing in Hungary, Szeged might be the best choice in that respect now.

Világgazdaság reports a staggering 66% surge in demand in January compared to the same period in 2023. This uptick follows the announcement by BYD, a major Chinese electric car manufacturer and a global rival of Tesla, declaring their intentions to establish a European plant in Szeged. Experts predict that real estate and rental prices in Szeged will far surpass the national average.

Projections suggest a potential 30% increase in property and rental prices within the next 1-2 years, placing Szeged on par with Debrecen, where the German giant BMW plans to construct a similar plant.

Read also:

  • HERE are the leading regions in Hungary: would you move here?
  • Rental prices to increase significantly this year in Hungary – Read more HERE

Rental prices will also skyrocket in Szeged

For insight, László Balogh, an expert on ingatlan.com, highlighted that locals might not be able to fetch high prices for their properties. The square meter price for non-newly built properties in Szeged currently stands at around HUF 670,000 (EUR 1,734), trailing behind Budapest by only 30%.

Presently, the average rental price in Szeged hovers around HUF 140,000 (EUR 362) per month. However, experts anticipate a significant surge in the coming months, drawing parallels with cities like Debrecen and Győr that experienced similar trends in the wake of significant developments in the car manufacturing industry.

Mr Balogh said there was a chance for an even 30% rental price rise in the next 1-2 years.

László Balogh suggests a likelihood of a 30% increase in rental prices over the next 1-2 years, prompting investors to explore opportunities, including old “Kádár cubes,” which can be easily transformed into accommodations for guest workers. The management of the upcoming plant is expected to seek housing options in the suburbs or downtown, potentially giving a boost to the family house-building sector.

Furthermore, with state bond interests on the decline, investors are actively searching for new prospects, and Szeged’s real estate market is emerging as an attractive destination for them.

Here are the leading regions in Hungary: would you move here?

Budapest property market

House price growth stopped in 2023 in Hungary. After typical double-digit price increases in previous years, the housing market saw annual price rises of less than 2% in the fourth quarter of last year. Within the country, there are still very significant differences. Some areas have seen an annual increase of around 5%, while others have seen prices fall. There are also places that can be considered “star regions”, according to the analysis of an expert at ingatlan.com.

“Nationally, house prices were only 1.8% higher in the last quarter of 2023 compared to the same period a year earlier. This is a minimal difference, but also a very drastic slowdown compared to previous years,” said László Balogh, chief economist at real estate agency website ingatlan.com.

“The halt in price increases was to be expected, as many people postponed their housing purchases due to the high interest rates last year and the new public housing programme starting in January,” he added. In December, however, national house prices rose by 0.8%, partly due to a 15% pick-up in demand in the final month of 2023. The expert pointed out that the buoyant start to 2024 should not be seen as such a surprise given the December recovery, Pénzcentrum writes.

New “star regions” on the rise in Hungary

While the house price index shows an average increase of 1.8% in 2023, there are significant and contrasting changes across the country. For example, house prices in the Western Transdanubian region, which is one of the most economically developed parts of the country, rose by almost 5% in the last quarter of last year compared to a year earlier.

“The Northern Great Plain region closed the last month of the year with an even higher price increase of more than 5%. This was thanks to the developments there, including the factory investments in the Debrecen area,” Mr Balogh added.

Some places even saw price decreases

Looking at the housing market as a whole, the most buoyant housing markets in the capital and Pest county saw essentially no increase in prices, with price rises of only 0.4 and 0.8% respectively. The result in Budapest played a major role in keeping the annual rate of price increases below 2% nationally. “It is also worth highlighting the South Transdanubian region, where prices fell by 0.5% over a year,” the expert said.

According to the expert, a turnaround in housing market turnover is expected this year. After last year’s decline, the number of sales could increase. However, the pace of price growth this year may lag behind the pick-up in sales, with house price growth at a national level expected to be between 3-8% in 2024.

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From stable to castle: selling for EUR 2 million

red castle

Kunbaracs, located half an hour’s drive from Kecskemét, boasts one of the biggest attractions of the county: the Vörös Kastély (Red Castle). After 10 years, the castle is once again up for sale.

Modest beginnings

The oldest part of the building, the ground-floor vaulted hall, may have been built in the 1780s as a cattle or sheep stable, initially owned by the Teleki family. József Zeyk inherited the estate from the family in the early years of the 1860s. He mainly owned estates in Transylvania, so this was an unexpected addition to his wealth.  However, the property didn’t remain in the possession of József Zeyk for long. In a military survey done in 1872, it was already mentioned as Tavaszi Manor.

From stable to castle

red castle

In the 1870s, the estate underwent major changes. Through the addition of an upper floor and the creation of new wings, what was once a stable became a proud castle. The year of the changes was most likely 1873, which is the engraving that marks the corridor wall on the ground floor.

The transformation not only included the completion of the upper floor but also the construction of tower-like protrusions on the southwest façade, giving the castle a unique appearance. Additionally, during this period, the two-winged door was created in the center of the main façade, above which a looming dome was added. Over time, the central tower of the building, which had undergone several renovations, was covered with a red minium plate, giving the castle its name, turizmus.com writes.

The castle in the 20th century

red castle

The first mention of the ‘Red Castle’ dates back to the 1910s, when it was under the ownership of Dr. Béla Kelemes. He carried out some major renovations in 1920. Most notable is the transformation of the previously open, domed entrance tower and the construction of two semi-circular staircases on either side of the new tower’s entrance doors.

The second half of the century brought some great changes in the history of the ‘Red Castle’. Ownerhip of the castle passed to the Michels family in 1948. Luckily, it was not nationalised in the socialist era, because the owners were of peasant origin and contributed significantly to the development of agriculture in the surrounding area.

However, the family decided to sell the building in 1979 to the Kunbaracs Agricultural Cooperative. The most beautiful room in the castle, the “knight’s hall” with its rib-vaulted ceiling served as a tractor storage and repair workshop during the era, with a thick layer of oil covering the floor. The building’s condition only deteriorated over time, and in 1991, even its roof caved in. Luckily, restoration began just in time, and by the 2000s, the castle was once again in its prime form.

Current standing

red castle

In 2010, a family from Pest County purchased the then-castle and transformed it into a lovely guesthouse. The marble-engraved inscription “Vörös Kastély”, which can still be seen on the façade of the mansion, welcomes guests to 9 guest rooms, three of which are furnished with period furniture. Complete comfort and entertainment of guests was also ensured by the installment of a swimming pool, a bathhouse by the lake, and a mini fitness room. Now, it stands as one of the most beautiful castles of Bács-Kiskun County. The 776-square-meter, 12-room castle is now on sale for HUF 765 million (EUR 2 million).

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Rental prices to increase significantly this year in Hungary

real estate property in budapest rental market home prices

Here is how much rental prices in Hungary are expected to grow in 2024 based on experts’ forecast.

According to Blikk, a Hungarian tabloid, 2024 will see a considerable rise in rental prices in Hungary again. For example, in Budapest, rental prices grew by 19% between December 2022 and 2023. In 2024, that price rise will probably reach 10% again.

Rentingo.com, a rental search platform, told MTI, the Hungarian News Agency, that the rental price rise between December 2022 and 2023, reaching 19%, was way behind the 2021-2022 record. That hit 27%. Anyway, investing in property in Hungary seems to remain worthy.

Last December, the average rental price in Budapest was HUF 223 thousand (EUR 590) per month. Demand is rising, but support is decreasing due to the few newly-built apartments in Budapest. Furthermore, investors do not put their financial assests into the old apartment renewal projects.

Experts of the platform believe that this year, the average rise in the rental market will exceed 10%. The increase would be gradual provided the market was not hit by unexpected shocks.

They added that the reason for the moderate price rise is the lower inflation in Hungary. Last October, the official inflation in the country was below 10%. In 2024, the government expects an average inflation of around 5-6%.

Read also:

  • Orbán cabinet purges Budapest ticket, pass scheme: chaos may come in March – Read more HERE
  • Experts: twist expected on the Hungarian property market in 2024 – Details in THIS article

Szeged residents outraged by Chinese company seeking property in Hungary

Residents in Szeged, Hungary, have been devastated by the news that the Chinese company BYD is to build a new factory within one of their residential gardens.

New Chinese factory BYD

The Chinese BYD factory has chosen Szeged to build its first European car manufacturing plant. Despite recent secrecy surrounding the project, an overwhelming majority of residents reportedly support this “environmental and industrial investment.”

However, contrary to the sentiments expressed by Szeged Mayor László Botka, a significant number of young adult families residing in Liliom Lakókert oppose the investment. One resident lamented, “This was meant to be a tranquil, family-oriented neighbourhood,” as quoted by telex.hu.

“Last Friday, three Chinese guys were here. They were drone-driving, and when I started talking to one of the neighbours, they came to ask about available houses for sale or rent,” shared a Szeged resident.

Szeged residents do not want a factory

Discontent among Szeged residents is evident, with many expressing “outrage that an industrial park is being built here, even though it could be on the other side of the motorway”. Having said that, others have no fundamental objection to the factory itself, as it would be a closed plant that would not disturb the peace and quiet of the residents.

However, the construction of the factory would involve an extension of the 502 bypass. Moreover, a four-lane road would run along a stretch of the end of the gardens, where there are now ploughs or empty plots. Consequently, it would inconvenience many residents.

The entire industrial park is slated to be situated on the urban side, with only a small section extending beyond the border, housing a railway terminal.

Szeged
The purple will be the BYD, with the Lily Residential Garden visible at bottom right, with the continuation of Route 502 being built on the northeast edge. Although this will not be introduced into the housing estate, environmental impacts will be present (Photo: Szeged MJV Municipality)

Another polled resident said that she had not heard of the factory construction but only of a smaller industrial park project. While a couple with dogs complained about the increased noise in the area compared to a few years ago, questioning whether the vacant land would be developed later. They also raised doubts about battery production or other chemical activities occurring at the factory. “Why bother with separate logistics for the battery when they have the entire assembly process here from scratch?” – they wondered. Despite official statements denying battery production in Szeged, concerns persist.

Water supply poses another challenge, as the factory’s high water demand raises fears of residents receiving contaminated or poor quality drinking water. Additionally, one woman expressed worries about the influx of guest workers potentially leading to conflicts within the community.

 

Record rental and real estate prices in Hungary in 2023

Budapest real estate housing crisis in Budapest's real estate market

Although the rental and real estate prices have been stagnating in the final months of 2023 in Hungary, it has been a hell of a year for tenants and prospective homebuyers. Rental costs jumped by 12% this year, but the real estate prices have also reached staggering levels. Here are the most extreme examples.

Skyrocketing rent prices

Forbes reported that the average rent in Budapest was HUF 240,000 (EUR 623), while in bigger Hungarian towns it ranged between HUF 80,000 (EUR 208) and HUF 200,000 (EUR 519). Towards the end of the year, the prices were stagnating. In November, the rent went up by 0.2% on average in the country and by 0.1% in the capital. However, on a year-on-year basis, the surge was about 12%. According to experts, the price increase is mainly due to rising incomes. Inflation has only a minor impact on the market on its own.

Rent in Hungary

As of December, the average rent in Budapest remains at HUF 240,000 (EUR 623). Data also reveals that the majority of rentals are concentrated in the 11th and 13th Districts of the city. The 1st district emerges as the most expensive, averaging HUF 300,000 (EUR 780), while the 23rd district retains its status as the most economical, with an average rent of HUF 180,000 (EUR 468). Győr is the priciest town for rent among county seats, averaging HUF 200,000 (EUR 519), followed by Debrecen at HUF 188,000 (EUR 488) and Székesfehérvár at HUF 178,000 (EUR 463). The most budget-friendly county seat is Salgótarján, where an apartment rents for an average of HUF 80,000 (EUR 208).

Pricing extremes

Some remarkably affordable rooms were available for rent in Kecskemét, Debrecen and Szeged, with monthly fees ranging from HUF 25,000 (EUR 65) to HUF 30,000 (EUR 78). Want to hear something even more shocking? In the village of Jobbágyi, Nógrád County, a 38-square-metre home could be rented for HUF 50,000 (EUR 130) per month. In Budapest, the least expensive flatlet, located in the 20th district, was advertised at just HUF 60,000 (EUR 156) per month. On the opposite end of the spectrum is a 140-square-metre home on the Buda side, a two-storey penthouse with its own sauna and garages, commanding a monthly cost of HUF 1.72 million (EUR 4,470). In rural areas, the most expensive residence was a family house in Balatonfűzfő, costing HUF 950,000 (EUR 2,469) per month.

Real estate landscape in Hungary

As Portfolio writes, demand surged across almost all locations towards the year-end, with the Buda side experiencing a whopping 50% increase in home sales compared to Q3. Statistics have also revealed that people preferred apartments with 2 or 3 bedrooms over flatlets. Districts vary significantly in the price of new homes sold, influenced not only by the price per square metre and average size but also by the volume of sales. For instance, in the 2nd district, where only 6 homes were sold in Q3, the average real estate price was HUF 364 million (EUR 946,385). Nevertheless, the capital’s average price stood at HUF 90 million (EUR 233,937). The most popular districts in Q3 were the 13th and 11th districts.

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Lots of foreigners buy property in Hungary: these are the most popular places

Experts: twist expected on the Hungarian property market in 2024

Experts: twist expected on the Hungarian property market in 2024

budapest property market airbnb rental real estate

Hungary saw a decrease in the average property prices. However, a twist is expected in 2024. Here is what experts say.

According to infostart.hu, the website of Infórádió, a Hungarian news radio station, Hungary saw a decrease in real estate prices in November. The average fall was 0.2%, but there were significant regional differences.

Based on László Balogh, the leading analyst of ingatlan.com, a Hungarian property search website, 0.2% is not a significant decrease on a national level. However, in an annual comparison, that rate is 2-3%. In some cases, mainly in big cities, that means HUF millions.

The most significant increase happened in the North Great Plains region (Nyíregyháza and its neighbourhood), while the highest decrease was in the West Transdanubia, close to the Austrian border. The latter can be strange since more and more Hungarians try to work in Austria and live close to the border to use the higher wages they get in Austria for having a higher standard of living in Hungary.

2024 will bring a twist to the property market due to the new state supports

In Budapest, the price increase was 0.1%, which is practically stagnation. Considering the EU’s highest inflation rate, however, we can say that investors kept their money in property lost on the business during the last year.

Based on the experts, 2024 will be a better year than 2023 concerning the number of purchases. In Q1 2023, the number of transactions fell by 36%, while in Q2, that rate was 20%.

In 2024, new state-supported loans will be available on the property market for families raising or planning to have children. Furthermore, Hungarian banks are to create loans with lower interest rates despite the high central bank’s high base interest rate level. The APRC maximum will be 7.3% in Hungary from next January.

As a result, experts expect 120-130 thousand property transactions in Hungary, a 10-20% rise. And that might result in a price increase spiral again in Hungary.

Read also:

  • Germans, Slovakians, Chinese and Romanians buy up Hungarian property – Read more HERE
  • Lots of foreigners buy property in Hungary: THESE are the most popular places

What can we expect from the Hungarian real estate market?

real estate

It’s realistic to say that the last year was not kind to the Hungarian real estate market. Multiple factors played into the fallback of the market, such as the contraction of government support, the energy crisis, those significantly increased interest rates and the less-than-ideal foreign economic conditions. The current real estate market is in a slump, which raises many questions.
How long does the stagnation last and how did it get this bad? Where is it worth investing and what are people looking for? How will the real estate market change due to the current situation?
The recent conference of OTP Home tried to answer these questions and some more, Telex reports.

How long will the stagnation last?

Gergely Tardos, CEO of OTP Statistics Centre held a presentation in which he painted a rather gloomy picture of the past year. However he highlighted that the worst is over and the coming year is most likely going to bring a rebound for the real estate market. In 2024 even a slight expansion can be expected. For this to come true the most important ingredient is stability.
This isn’t guaranteed, because the real estate market depends on a ton of factors that vary unpredictably.
Important contributors to this hopeful development are a stable economy and the inflation rate. The international scene wasn’t kind in the last two years, which also contributed to the current real estate situation. Luckily, in the opinion of the professionals the energy crisis is not real danger in the coming year.

What will change in the real estate market in the coming years?

According to the currently available data, the Hungarian economy is expected to emerge from recession next year. This means that inflation will decrease, and, paralely, real wages may significantly increase, in the best case scenario by 10 percent. This could mean a growth in state funded beneficiaries. In the opinion of Gergely Tardos, the worst is over, and the stagnation won’t last much longer on the real estate market and by 2025 there could be a significant development.

Is it worth investing right now?

The data for the real estate market rates were based on otpotthon.hu, which is one of the biggest competitors in Hungary in this industry.
Zsuzsa Lipták, CEO of OTP Home Solutions, clarified at the event that online trends also precisely indicate the decline of the real estate market in recent times.
Transaction data decreased by more than 30 percent in this period, equivalent to the 2008-2009 crisis level.
Online trends show that real estate ads stay online much longer, than in previous years. Most sellers are playing the waiting game, but 32 percent of the current advertisers has already modified their original price. Most of them downward, averagely willing to reduce by an 8-11 percent.
Analyzing advertising statistics of their database, the professionals at OTP state that there’s a general growth detectable.
Although the prices of panel apartments have decreased by four percent, family house prices have increased by an average of three percent compared to last year. Prices of new buildings went up by eight percent, and brick apartments by five percent. However, Zsuzsa Lipták pointed out that, considering inflation data, this still represents a decline in real value.

  • Read more about the future Hungarian economy HERE.
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Germans, Slovakians, Chinese and Romanians buy up Hungarian property

Foreign buyers property Budapest

Foreign property buyers swarm Hungary’s property market. They buy up real estate at the Northern and Eastern border and in the Transdanubian region. Foreign demand for Hungarian real estate is already above the pre-COVID level. Interestingly, Budapest is not that popular because Chinese, Vietnamese and Israeli buyers have not returned yet in high numbers.

According to Pénzcentrum, the shock caused by the Covid pandemic is not over. However, foreign buyers returned to the Hungarian property market. 2018 saw 7,300 contracts, but in 2022, that number rose to 8,000. However, changes do not involve only numbers.

Four countries jumped out concerning foreigners buying property in Hungary: Germany, Slovakia, China, and Romania. Between 2018 and 2022, most buyers came from Germany, and their number doubled (2127). Chinese buyers disappeared because of the coronavirus. Fortunately, they came back by 2022, although their number remained only half the 2018 peak (814).

Romanian buyers engaged in 750 transactions, 25% less than in 2018. Slovakians did the other way around. They increased the number of property transactions by 45%. Thus, they became the second biggest foreign group in that regard, besides the Germans with 1,042 apartments acquired.

Chinese, Vietnamese and Israelis buy property almost only in Budapest. 9 out of 10 transactions happened in the capital in 2022. Meanwhile, the Dutch and Germans are a fan of the Hungarian countryside. In 2022, only 6% of their apartments were in Budapest. We wrote about a Dutchman who bought an entire Hungarian village to rent it out in THIS article.

Country villages and towns are becoming popular among foreign buyers

Romanians, Slovakians, Austrians, Belgians and Swiss also chose villages and towns outside Budapest. That is probably because they come only after they retire to enjoy the healthy Hungarian countryside, the relative safety here and the fact that everything is cheaper here than in their homes. Meanwhile, East Asians do not come here to retire but to work a lot.

In 2018, 42% of the transactions concerned properties in Budapest. That rate decreased to only 33% by 2022.

Austrians and Ukrainians paid 119% more for an average real estate in 2022 than in 2018. Meanwhile, the lowest price increase concerned French buyers with only 19%. That is because they turned to properties in the countryside. Romanians experienced a 25% rise because they bought property near the Hungarian-Romanian border.

In 2022, the number of buyers coming from the UK increased significantly. They bought thrice that many apartments and houses than when they were EU members. In Budapest, the British were the second biggest buyers community besides the Chinese in 2022.

Interestingly, Russians, Ukrainians and Romanians would like to buy expensive properties in Budapest’s elite Buda districts, Csaba Laczi, a regional director of OTP Ingatlanpont, said.

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  • Lots of foreigners buy property in Hungary: these are the most popular places

Is the Hungarian real estate market on the brink of a revival?

MBH Bank’s Analysis Centre has recently published a comprehensive analysis of the Hungarian real estate market, encompassing various aspects of the domestic real estate landscape. This analysis sheds light on key trends, economic conditions and projections for the future.

Market trends and economic impact

According to Privátbankár, the study highlights a turning point in the housing market, prompted by shifts in economic conditions, the impact of inflation and tightening monetary policies in the second half of the previous year. This shift is manifested in a reduction in sales volume and a deceleration in house prices. The inflationary environment has led to a decrease in disposable household income, resulting in sustained low demand expected to persist throughout the year. Anticipated substantial improvements in the macroeconomic environment in the next year could pave the way for a turnaround in housing market trends by 2024.

Construction industry challenges

As previously highlighted, Hungary is witnessing an unstoppable decline in housing construction. Housing starts and issued building permits have continued to decline, with the first three quarters of of 2023 witnessing a 21% reduction in newly built dwellings compared to the previous year. The number of dwellings under construction also plummeted by 43%. Extended construction lead times foretell delays in home deliveries,, signalling a slower recovery in this segment of the construction industry.

Transaction projections

The third quarter of 2023 estimates over 22,000 real estate transactions, reflecting a 20% annual difference. The anticipated launch of CSOK Plus in 2024 could potentially generate an additional 10-20,000 housing transactions. However, prices are not expected to undergo significant changes.

Price stability and future market dynamics

Nominal stability in residential property prices in 2023 contrasts with a real decline of 18.5%, as reported by the MNB. Rent growth remained stable until the end of summer, with a 12% year-on-year increase in nominal terms. However, this growth did not keep pace with inflation. The current situation in the housing market may reverse in the upcoming year, driven by anticipated economic developments such as lower lending rates, improved consumer confidence, rising real wages and newly introduced subsidies.

Emerging real estate development

Amidst market challenges, the Waterside Residence, a new development on the Marina coast, is taking shape. The demand for new apartments near the Danube in Budapest remains high, especially those with a Danube panorama, Pénzcentrum reports. Developers continue to witness sustained interest in such projects, aligning with ongoing housing market trends.

Sustainable construction and special features

Newly built homes are showcasing improved energy efficiency, attributed to tightened legislation. The Waterside Residence project stands out for its AA+ rating, promising much lower overheads. Equipped with a unique hybrid system of geothermal pumps and heat pumps, the project aims for energy-efficient heating and cooling. Individual services, such as a gym, yoga room, sauna and playground, enhance the project’s appeal, with buyers receiving an interior design plan as an added benefit.

The Hungarian real estate market is navigating challenges, but with anticipated economic improvements and innovative developments, the landscape could see a positive shift in the coming year. For more insights into the Hungarian real estate market, explore our articles HERE.

 

Lots of foreigners buy property in Hungary: these are the most popular places

Property prices are skyrocketing at lake Balaton 2

The Hungarian Central Bank’s recent data reveals a sustained high in foreign property purchases, with nearly 8,000 transactions in 2022 and over 3,200 in the first half of 2023. The allure of Hungary is particularly strong in the five downtown districts of Pest, boasting a foreign property ownership rate surpassing 20%, while in the West and South Transdanubia, it holds steady at a respectable 10%. The big spenders on Hungary’s property scene in 2022 were the Vietnamese, Chinese, and Russians, splashing out between HUF 60-70 million (EUR 157,000 – 183,000).

Foreigner are charmed by Hungary’s property market

According to bank360.hu, the rate of foreign property buyers significantly grew in Hungary in the last 18 months. In Q2 2023, 6% of real estate sales, a total of 1,800 transactions, involved international buyers. That rate was even higher in Q3 and Q4 2022: 6.6% and 6.5% respectively.

In 2022, Hungary witnessed a surge in foreign interest, exceeding pre-COVID peaks (7,300 in 2018; 4.5%). Nearly 8,000 foreign nationals bought property in Hungary. The weak forint was a major player in this trend, with foreigners spending an average of HUF 43.3 million (EUR 113,000) to secure their own piece of Hungarian real estate. This is a significant jump from the average of HUF 25.2 million in 2018, MNB reported.

While 2023 brought a dip in overall property transactions due to economic uncertainties, skyrocketing inflation and interest rates, foreign buyers bucked the trend, claiming a larger share. Between January and September of this year, there were 89.3 thousand transactions, which is a 28% decrease on an annual basis.

The most popular places among foreign buyers

The downtown districts of Budapest, especially the 5-9th districts, saw a notable increase, with foreigners comprising 8.7% of buyers, which marks a significant rise from last year’s 7.8%. The same trend persists in Somogy County, where the reason for the growing interest is Lake Balaton. Furthermore, Germans, Austrians and Dutch nationals like to invest even in West and South Transdanubian counties where property is cheap.

Most property buyers are Germans. Their number grew by 69% compared to 2022. Every second property buyers in Somogy and Zala counties were German nationals last year. Vietnamese, Chinese and Russians spend the most on an apartment: HUF 60-70 million, EUR 157,000 – 183,000. Interestingly, the French also paid good money for property. Their average was HUF 51 million (EUR 133 thousand).

Slovakia stands in second place. The majority of the Slovaks coming to Hungary are above 65 years old. In Dunakiliti, Abaújvár, Gönc and Hidasnémeti, small Hungarian villages near the border, the majority of the real estate purchases involved Slovakian nationals. Of course, they might of Hungarians origin who spent their active years in Slovakia.

24% of the Germans were pensioners, while only 3% of the Chinese buyers were above the retirement age. It concludes that West and Central Europeans come to Hungary to retire, while East Asians arrive as employees or business owners. The most sought-after towns outside Budapest were Rajka, Battonya, Győr, Mosonmagyaróvár (in proximity to the border) and Hévíz (close to Lake Balaton).

Read also:

  • Contradictory numbers: What’s happening with property prices in Hungary? – Read more HERE
  • Unstoppable decline in housing construction in Hungary – check out the details in THIS article

Hungary resumes residency sales for the wealthy

budapest night chain bridge buda

In a move similar to the controversial Golden Visa scheme of the past, Hungary’s government, led by Prime Minister Viktor Orbán, is introducing residency sales for foreign investors in Hungary. 

The guest investor status

According to Népszava, the residency sales form part of the “tightening” of the migration policies in response to the “crisis situation caused by mass immigration”. The revised act introduces a “guest investor status” aimed at attracting foreign investors. This status permits stays exceeding 90 days and multiple entries. Additionally, there’s an option to apply for a guest investor residence permit, facilitating unrestricted entry and exit to Hungary, akin to the now-discontinued Golden Visa programme. Read more about it HERE.

Orbán-linked real estate funds

The initiative is raising eyebrows due to its potential impact on real estate funds associated with Orbán’s son-in-law, István Tiborcz. Beneficiaries of the new programme include real estate funds connected to Tiborcz, notably the Central European Real Estate Fund (CEI) and Diófa Thales. These funds, listed among the 24 funds registered with the Central Bank, have the potential to significantly boost their turnovers.

Investment criteria

To qualify for guest investor status, individuals must invest in Hungarian real estate funds or meet specific criteria, such as purchasing real estate worth at least EUR 500.000  or providing a grant of EUR 1 million to a designated higher education institution. As we reported earlier, there is already a record number of foreign buyers in the Hungarian real estate market. Adding to this trend, the most cost-effective route to obtaining a residence permit appears to be through investment in real estate fund units.

EU’s reservations and concerns

The European Commission (EC) has expressed reservations about investor resettlement schemes. Furthermore, they are concerned about potential issues like money laundering, tax evasion and corruption. In a recommendation issued last March, the EC urged governments to conduct rigorous checks before granting residence permits under such programmes. The EU body is particularly concerned about the possibility of sanctioned individuals from Russia and Belarus obtaining Schengen visas through these schemes.

Is it time to buy a home? Budapest house prices fall again

Hungarian housing market - real estate

At national level, prices of apartments and houses for sale remained stable, but in Budapest the trend is downwards.

No decrease at national level

In Hungary, prices of used and new homes for sale did not fall in October compared to 2022 figures. The October figures from ingatlan.com show that there are some areas where there has been a significant change.

In terms of county towns, Győr, Veszprém and Debrecen lead the second-hand housing market. The average price per square metre is  HUF 740 thousand (EUR 1,950). Debrecen also tops the list for new properties. The eastern Hungarian city is followed by Zalaegerszeg and Székesfehérvár, where the average price per square metre is already above HUF one million (EUR 2,637).

On the other side of the list are Salgótarján and Békéscsaba. In the former, the price per square metre is HUF 269 thousand (EUR 709), while in Békéscsaba it is (EUR 1,007). Békéscsaba is also cheap in terms of new apartments, while Nyíregyháza and Kecskemét are at the bottom of the list.

Budapest shows a downward trend

Looking at the country as a whole, prices are stagnating in the Hungarian capital, but a different trend can be observed in Budapest. Prices of apartments and houses for sale in Budapest fell by 0.7% in October. The decline is mostly explained by high interest rates and declining interest.

“However, the good news is that interest in the real estate market has picked up in recent weeks, which is also due to the announcements related to the housing subsidy changes,” said László Balogh, chief economic expert at ingatlan.com.

In Budapest, the average price per square metre of second-hand homes was HUF 943 thousand (EUR 2,487) at the beginning of November, while new-build houses were priced at HUF 1.3 million (EUR 3,429). The cheapest second-hand flats are in districts XX, XXI and XXIII, while new-build houses are in districts XV, XVIII and XX.

Detailed data from the Housing Index show that one more area deviates from the stagnating trend. In the western part of Hungary, the counties of Győr-Moson-Sopron, Vas and Zala have seen a significant price increase of 1.7%, vg.hu reports.

Unstoppable decline in housing construction in Hungary

construction

The number of home building permits issued in Hungary fell by 42.7 percent year-on-year to 14,894 in the first three quarters of this year, data released by the Central Statistical Office (KSH) on Monday show.

According to KSH, 10,808 homes were taken into use in the country, 21% fewer than a year earlier. In Budapest, there was a 29% drop, with 3,234 dwellings built. The number of dwellings built fell by 37% in the county seats, by 8.6% in other cities and by 8.1% in villages compared to the same period in 2022.

The number of dwellings built by businesses fell by 22% and those built by natural persons by 16% compared to Q1-Q3 2022

Of the dwellings put into use in new residential buildings, 50% were in detached houses, 43% in multi-family buildings and 3.4% in residential complexes.

The share of owner-occupied dwellings was 38%, and the share built for sale was 60%.

The average floor area of dwellings put into use increased by 4 m2 to 97.8 m2.

The number of dwellings handed over decreased in all regions compared to the same period in 2022, with the largest decrease in Northern Hungary (63%) and the smallest in the Pest region (1.6%).

The number of dwellings handed over fell by 19% in Central Hungary, 13% in Transdanubia and 36% in the Great Plain and North statistical large region.

The number of dwellings to be built on the basis of building permits and simple declarations was 14,894, 43% fewer than in the first three quarters of 2022. 34% of the new dwellings are planned to be built in the capital. Construction sentiment has declined in all settlement categories. Downwards in the hierarchy of municipalities, the decline is increasing: 39% fewer dwellings are planned in the county seats and in the capital, 43% fewer in other cities, and 49% fewer in villages.

The number of dwellings to be built on the basis of building permits and simple declarations decreased in all parts of the country. At the regional level, the largest decrease occurred in Southern Transdanubia (57%), including Baranya county (67%). The number of building permits for dwellings decreased by 50% in both the Pest and Western Transdanubian regions.

At the level of statistical large regions, the decline in the number of planned dwellings was 43% in Central Hungary, 47% in Transdanubia, and 31% in Great Plain and North.

Compared to the same period in 2022, based on the new building permits issued, 43% fewer, a total of 6,297 residential buildings are planned to be built in the country. The number of non-residential buildings planned nationally was 3,070, also down from a year earlier.

As we wrote last week, new government scheme revives Hungary’s property market, the prices will go up soon

Also, we wrote about the record number of foreign buyers in the Hungarian real estate market, details HERE.

Record number of foreign buyers in the Hungarian real estate market

Hungarian housing market - real estate

While the real estate market in Hungary has seen a decline, an increasing number of foreigners are making investments in the country. The influx of foreign homebuyers has even surpassed pre-COVID-19 levels, setting a new record. Here’s a look at what nationalities are buying property and for how mu

New record

Mfor.hu recently reported a surge in foreign homebuyers in Hungary. Data from ingatlan.com and the Hungarian Central Statistical Office reveals that the number of foreign buyers now exceeds the levels seen before the COVID-19 pandemic, setting a new record. László Balogh, Chief Business Expert at ingatlan.com, noted:

Foreign homebuyers have bucked the trend. Last year, 138,000 homes changed hands, marking a 14 percent decrease from the previous year. At the same time, foreigners bought 8,000 homes, up almost 10 percent from the pre-pandemic peak in 2018 and a 38 percent year-on-year increase. We must add that in 2021, activity from abroad was subdued due to the pandemic.

The expert also highlighted that the forint has weakened against the euro, as we have reported HERE. Therefore, foreigners can purchase homes in Hungary at more affordable prices, attracting many who view these properties as attractive investment opportunities. Furthermore, there’s a growing interest among foreigners in finding a home for settling down in the country for a few years at least.

Where do foreign buyers come from?

According to Portfolio, over 2,000 foreign buyers hold German citizenship. This shows a growth of 70% compared to the year 2021. The data indicates that Germans tend to favour homes near Lake Balaton, as well as in Zala and Somogy counties. Over 1,000 Slovakians have also invested in Hungarian properties, primarily pensioners aged over 65, who tend to purchase homes close to the northern border of Hungary, near Slovakia. Romanians and individuals from the UK are also among the top foreign buyers in Hungary. Chinese buyers have acquired more than 800 homes, typically opting for apartments in the capital.

Who bought the most expensive homes?

It may not come as a surprise that the most expensive properties are predominantly acquired by Asians and Russians, a trend that has remained consistent over the past few years. Vietnamese buyers, on average, have spent more than HUF 70 million (EUR 183,000) on a home. Chinese buyers follow closely, with an average of HUF 63 million (EUR 164,734), while Russians come in third place with an average of HUF 60 million (EUR 156,890). In contrast, individuals from the Netherlands and Romania tend to spend the least on Hungarian homes, which might be attributed to their preference for properties outside Budapest. Generally, real estate prices are notably lower in the countryside. For further insights into the property market in Hungary, you may be interested in exploring the current trends in property prices in Hungary.

Contradictory numbers: What’s happening with property prices in Hungary?

Budapest property real estate market housing

The Hungarian central bank’s (MNB) latest house price index for the second quarter of 2023 has been published. It shows that the annual growth rate of property prices has slowed down significantly in Budapest and in rural cities.

However, the picture is very different when we look at the figures in real terms. In that case, the report shows that prices have fallen in all categories. Adjusted for inflation, prices in Budapest have fallen by 14% in a year, and by 25% in the municipalities.

Moderate rise in property prices when looking at nominal values

In the capital, property prices rose at a moderating quarterly pace of 1.1% in the second quarter of 2023, following a 2.7% increase in the previous quarter, Portfolio writes based on MNB’s index. Nominal annual property price dynamics have thus slowed to 4.9%.

In rural cities, house prices fell by 1% in the second quarter, following a 4.3% increase in the previous quarter. Thus, on an annual basis, the annual property price dynamics slowed from 9.5 to 1.1%.

On a quarter-on-quarter basis, property prices in the first quarter of 2023 were still growing at a rate of between 3 and 6% everywhere except in the Central Hungarian region. In the second quarter, however, house prices fell by 3.1% in the Northern Great Plain region, 2.9% in the Southern Great Plain region and 1.5% in the Western Transdanubian region. Meanwhile, in the other regions house prices continued to rise.

Huge price decreases in real terms

In real terms, i.e. relative to inflation, the picture is very different, Portfolio notes. Property prices have fallen by 18.5% year-on-year. The smallest decrease was 14-14% in Budapest and the Western Transdanubian region, while the largest was 25% in the municipalities.

Read more of our articles on the Hungarian real estate market:

New government scheme revives Hungary’s property market: prices will go up soon

the most expensive street in hungary budapest

The government will introduce a new housing subsidy scheme in 2024, which may revive the frozen Hungarian real estate market. After the COVID pandemic, the Hungarian property sector started to thrive, prices skyrocketed and made it impossible for average Hungarians to buy a flat or house in the cities or Budapest. The trend broke last year, but it seems it will continue from 2024. Experts believe property prices will begin to increase again with at least the average inflation rate.

According to G7.hu, a Hungarian economy-focused news outlet, the government’s CSOK Plus scheme may resurrect the brain dead Hungarian property market. The Orbán administration introduced several measures in the 2010s to help families. Among others, there is a generous tax refund scheme, discounted travelling and entry tickets for families raising children and a financial support system helping families acquire property.

The current system helps families having four or more children the most, but it will fundamentally change in 2024. As a result, the Hungarian real estate market may start to flourish, meaning a significant price increase.

The government introduced such measures to help increase the fertility rate in Hungary. In that regard, they were successful concerning numbers. Between 2011 and 2021 (PM Orbán came to power in 2010), that rate increased from 1.23 to 1.59. The goal is 2.1, but 2022 saw a decrease in that regard, since the rate fell back to 1.52.

The property purchase support system (CSOK) will change in 2024. The new CSOK Plus scheme will offer a discounted HUF 15-50 million loan (EUR 39 thousand – EUR 130 thousand) with a fixed, 3% interest rate. After each kid following the birth of the first child, they will abolish HUF 10 million. That means a family having six children can buy a HUF 50 million flat and pay not even a single forint back. Of course, such families are rare in Hungary. But married couples planning to have at least three babies can take up HUF 60 million (CSOK Plusz and the so-called Babaváró loan) and buy a flat even though they have no saved money. In that case, their fixed instalment will be HUF 283,500 per month (EUR 738), which requires at least HUF 567 thousand (EUR 1477) net income.

Pénzcentrum wrote the most crucial prerequisites in THIS article, we summed them up below:

  • 1 child: 15 million, 2 children: 30 million, 3 children: 50 million available loan
  • interest rate: fixed 3%
  • minus 10 million of the loan you have to pay back after the second kid
  • repayment time: 10-25 years
  • required cash: 10% provided you have no property and 20% if you do
  • the couple has to be married
  • the woman cannot be older than 41 years
  • the support is available even for foster parents

Property prices will increase again from 2024

In the CSOK Plus scheme, there will be no non-refundable segment. Only those get non-refundable support and discounted loans who buy property in the more than 2 thousand small settlements the government defined last year. You may find a MAP of them HERE.

Those buying a flat or house in Budapest or the cities can only opt for discounted loans after 2024.

Károly Benedikt, leading analyst of the Duna House, said that the measure might result in 10-20 thousand more transactions in the Hungarian real estate sector. Therefore, prices might increase again at least by the average inflation rate.

In 2022 and 2023, 40% of the buyers disappeared from the previously overheated Hungarian real estate market. As a result, based on the property price index of ingatlan.com, in Q3 2023, the average real estate prices decreased in Hungary.

Shocking price gap between most and least expensive streets in Hungary

Recent data has revealed a significant price gap in the square-metre prices of houses in Hungary. Ingatlan.com compiled a ranking based on statistics from the Hungarian Central Statistical Office and sales from the previous year. Here are the most and least expensive areas in Budapest and Hungary.

Last year’s ranking in Budapest

24.hu reported that residential properties were selling for an average of nearly HUF 2.5 million (EUR 6,525) per square metre in the most expensive street. It comes as no surprise that this street, Költő Street, was located in the capital. The first and second runners-up were also located in Budapest, Vécsey Street (District V.) and Orom Street (District I.). There, the price per square metre was HUF 2.3 million (EUR 6,000) and HUF 2.2 million (EUR 5,740), respectively. On the opposite end of the spectrum was the infamous Hős Street (District VIII.), the cheapest in the capital last year, with HUF 223,000 (EUR 580) per square metre. Rákóczi Road (District XVI.) secured second place with HUF 298,000 (EUR 778), and Gitár Street came in third with HUF 313,000 (EUR 817).

Last year’s ranking in the countryside

In addition to Budapest, settlements along the shores of Lake Balaton exhibited a shockingly expensive real estate market. Settlements near Lake Balaton were the only ones outside Budapest to feature in the list of the top 10 most expensive streets in Hungary. In 2022, the most expensive street was situated in Balatonfüred. The average square metre price in Honvéd Street was HUF 2.34 million (EUR 6,110). The other two streets in the top three were located in Siófok, with the average price in Deák Ferenc Promenade at HUF 1.73 million (EUR 4,520) and in Vitorlás Street at HUF 1.62 million (EUR 4,230). The least expensive houses outside Budapest were found in Mezőhegyes, with an average price per square metre as low as HUF 21,000 (EUR 55).

This year’s rankings

As anticipated, the most expensive area in 2023 remains in Budapest. Széchenyi Quay (District V.) takes the first place on the list with a price per square metre of almost HUF 3.5 million (EUR 9,135). Second place goes to Szántód’s villa row, where the average price was HUF 3.2 million (EUR 8,350). The second runner-up this year is Sirály Street in Balatonfűzfő, with an average price per square metre of HUF 3.1 million (EUR 8,090). Much like last year, the most expensive streets are either in Budapest or near Lake Balaton. The least expensive street this year is Táncsics Mihály Street in Nágocs (Somogy County), where residential properties are surprisingly being offered for just HUF 5,000 (EUR 13) per square metre. In conclusion, the most expensive houses cost 700 times more than the least expensive ones. However, as reported HERE, a brutal price fall is expected in the Hungarian property market. Additionally, an unexpected turn in Hungary’s rental price market is also happening.