Budapest Real Estate Prices Rising Momentum is Expected to Slow Down
Compared with the same period last year, the demand for second-hand housing in Budapest fell by 14% between June and August. According to data from a real estate search site, one of the reasons may be that the value of continuing to buy a property is lower for investment buyers.
Ingatlan.com chief analyst Laszlo Balogh said on the M1 Forint channel's fillér show. The decline in interest in home purchases also means a reduction in the volume of the housing market in Budapest, which may slow or even halt the rapid rise in real estate prices in the next phase. Balogh added that in the second-hand housing market in Budapest, the price reached 60-700,000 HUF per square meter, which has exceeded the affordability of self-employed buyers. The seller in Budapest usually sells a 50-square-meter apartment for $30-35 million.
Gábor Soóki-Tóth, head of analysis at Otthon Centrum, said that the new residential market will continue to be stable and demand will gradually increase in the near term. According to a survey of a real estate business network, in the first half of 2019, there were about 1,400 new listings in the supply market in Budapest, and Budapest is currently developing about 33,000 new properties.
The cheapest location in Pest
If you focus on the unit price per square meter, you will find a wide range of choices in the home market, ranging from 500,000 HUF to 3.2 million HUF. The lowest-priced apartments are located in the outskirts of Pest, a little more expensive than the roughly 650,000 to 850,000 HUF, which are more affordable apartments.
Soóki-Tóth Gábor explains: “If it is a high-end residence, it will cost 1.5 million or more per square meter. These properties are mostly located on the Buda side, the traditional mountain section and the city center.”
Property prices in other Hungarian cities have also reached the iconic HUF 220,000/m2 in the outskirts of Budapest, a 24% increase year-on-year. At present, there are about 9,300 houses in the construction phase, of which the longest is (1,700 sets), but Szeged and Debrecen are also growing.
Currently we understand that 1000-1200 new homes are already available for purchase in the housing market. The county has only launched 80 new projects this year, most of which are in Pest and Szeged, with about 1,600 new apartments - Soóki-Tóth Gábor.
State subsidies activate credit markets
According to the latest data, in the first half of this year, the amount of residential loans issued by financial institutions has exceeded 900 billion HUF, the largest part of which is housing loans. Financial experts say that growing state subsidies have also greatly boosted the development of the credit market. 530 billion HUF is used for housing loans, while more than 400 billion HUF are personal loans. Importantly, most personal loans are now used for home purchases, home renovation, modernization or loan refinancing. Trencsán Erika, chief financial expert at Money.hu, said that only 5,500 transactions have been conducted in the first month, with a total transaction value of HUF 54 billion.
The survey also showed that since the launch of the Family Housing Offer (CSOK) in 2015, it has allocated funds to nearly 110,000 families, and more than two-thirds of the households are used for second-hand housing purchases, while another one-third use Buy new properties.