The short answer is: there is no crisis. The longer answer is: there are numerous factors at play, one of which is that, officially, there is no crisis. Meanwhile, if you have no other source of income than your salary, you practically do not stand a chance when it comes to buying an apartment, no matter how small.
As we reported a couple of weeks ago, this March, the number of apartment purchases in Hungary hit a decade peak. In that article, we outlined a couple of reasons behind this seemingly illogical phenomenon. They were: the government’s measures to support families (e.g. the family housing allowance known as “CSOK”, VAT on new homes being reduced to 5%, and “CSOK” applicants being exempt from paying the property transfer tax) and the availability of affordable loans (including the “baby loan” introduced by the government, which the parents may spend on anything).
Forbes has now released a detailed analysis of the situation, listing a number of additional factors that have influenced the buying and selling of apartments. The first one is that
there is no such thing as the “Hungarian real estate market”.
As they explain, there are individual submarkets, according to the geographical area, type of real estate (apartments, family homes, etc.), and even the size of the apartment or house in question. While they are affected by the same events, they do not react to them uniformly.
The second is that even though many of us have experienced some financial instability, looking at the country as a whole, Hungary is not going through a crisis, at least not one comparable to the situation in 2009.
While some sectors have suffered incredible losses, others have not even felt the effects of the pandemic, the national budget is stable, bank loans are available, and the increase in unemployment is barely noticeable when looking at statistics from the past few years.
In Hungary, approximately 50% of properties are bought using a loan, which is considered unproblematic from an economic point of view.
The third factor is that, nowadays, real estate is one of the best forms of investment: it is likely to hold its value in the face of inflation, which started to increase in Hungary a short while before the pandemic.
The fourth and final thing to keep in mind is that the advertised prices do not necessarily match the final ones: there could be as much as a 10-15% difference between the two, László Balogh, analyst of the largest Hungarian real estate portal, told Forbes. Also, quite often, buyers do not have a choice: if they must move, they must move, and there is no time for bargaining, which also drives up the prices.