The property market
Hungary, including Budapest in particular, is a highly attractive location for real estate investors, both from Hungary and abroad. As a result of its geographical location, the country has become an important logistics and financial centre for Central and Eastern Europe. Budapest boasts a great cultural and architectural heritage, which makes it one of the cities in Central Europe attracting the highest number of visitors from around the world from year to year.
20 percent of Hungary’s population lives in the capital (approx. 2,450,000 inhabitants), which accounts for 60 percent of the country’s GDP. Similarly, in 2006, Budapest’s GDP amounted to 123 percent of the European average. Budapest is, without doubt, the country’s commercial, political and financial centre.
Beginning with 2007 and coinciding with the European budget for the period 2007-2013, Hungary has been appropriated 33,600 million Euros from the European Funds, to be spent on transport infrastructure, public institutions and the development of their equipment, which, along with the envisaged entry into the Euro zone in 2011, will entail a structural and inflationary change in terms of the prices of homes on the general real estate market in the forthcoming five years.
The current market trends began to unfold in 2000, after the Government implemented new measures in order to support the purchasing of homes. These measures were designed to give a new impulse to the property market, which has been felt in the steady increase of demand for new homes, the increasing professionalism of the industry, growing demand by foreign buyers, considerable improvements in terms of financing conditions for the purchase of a first home, increasing competition in the banking sector and central and local government projects with a view to renew urban neighbourhoods in the city centre.
Hungary’s access to the European Union in 2004 gave another impetus to the real estate market and it has been foreseen that the future introduction of the Euro will accelerate the increase of prices, which in turn will increase the profitability of investments during the years to come.
Another remarkable fact is the high level of the internationalisation of the industry. In addition to Hungarian businesses, other European countries, including Spain, are also heavily represented among the development companies operating on the Budapest real estate market.
The country is completely safe in terms of the operation of its legal and registration system. Hungary’s property registration system is one of the most advanced and up-to-date ones in Europe, containing detailed data on property, including full information on encumbrances, mortgages, disputes, etc. For industry professionals, it is relatively easy to access and query such data online.
Given the relatively low prices of new homes, their purchasing currently appears to be an excellent investment decision. Prices may range from €1,200 – 1,800/m2 for a medium-quality home, which account for 80 percent of all newly-built flats for sale to €2,000 – 3,500/m2 in certain developments of higher quality and select location. Revaluation is certain, due to the great level of latent demand for new homes throughout the country and to the economic growth anticipated for Hungary in the forthcoming years.
The average floor area of homes built in 2006 is 79 m2. Of the above, 14 percent were small studio flats of a size of 28-65 m2, 40 percent were single-bedroom flats whereas the remaining 43 percent had two or more bedrooms.
The typology of constructions ranges from traditional homes in green areas to attics and apartments for the middle and upper classes in central zones, renovated buildings, penthouses, lofts, etc., with additional services and high-quality furnishings.
The density of construction ranges from smaller buildings of 4-5 flats to residential developments of hundreds of apartments, meeting the whole spectrum of demand on the Hungarian market.
