Investment housing returns in Budapest: how are house prices evolving?

Investment housing returns in Budapest: how are house prices evolving?

Background of the Budapest housing market

According to the latest statistics, more than 90% of the population in Hungary live in owner-occupied housing, which is an outstanding proportion even at international level. By contrast, only 68% of owners in Budapest live in their own property, with the remaining 32% occupied in other ways.

Hidden rental market

Only 14% of Budapest properties are officially rented out, and experts say more homes are being rented out without paying taxes. It is common for tenants to be registered as still living with their parents in theory but actually living in Budapest. This is why many young people from rural areas who already live in the capital can remain statistically invisible.

  • District XIII: Proportion of owner-occupied properties below 60%.
  • District II: a "party district" with only 49% of residents being owner-occupiers.
  • District V: in the heart of the city centre, where the proportion of owner-occupied properties is just over 40%.

According to KSH data, there are nearly 969,000 registered residential properties in Budapest, so based on the 32% non-owner occupied rate, approximately 310,000 properties are occupied by renters.

Investments in the real estate market and property prices

Investors have made a significant contribution to the acquisition of residential property in Budapest in recent years, with 30% of all housing purchases between 2018 and 2021 being made by investors. Looking ahead, experts expect further demand growth, which could lead to a rise in property prices by 2025.

Buying your own home is becoming increasingly difficult, as prices per square metre in most parts of Budapest have already exceeded HUF 1 million. This places a significant financial burden on those trying to buy a home with a mortgage.

Lending conditions

Home loans are expensive in the current interest rate environment, but preferential terms are available depending on income:

  • A loan with a monthly net income of HUF 350,000 and an interest rate of 6.49% and a monthly repayment of HUF 150,000 is available.
  • For a monthly net income of HUF 500 thousand, a loan is available at an interest rate of 5.99%, with a monthly repayment of HUF 144 thousand.
  • Above a monthly net income of HUF 700-800 thousand, interest rates of up to 5.8% are available.

The challenge of affordable housing

Achieving affordable housing prices in Budapest will once again be a big task. The government is working on the "Housing Market Strategy 2035", which aims to improve the housing situation. Although details are not yet public, it is certain that access to housing will remain an important issue.

The future of the housing market remains uncertain as high prices make it increasingly difficult to own a home, while the rental market continues to face challenges. Future measures will be important to restore balance.

Source: bankmonitor.hu