Buying a property in Budapest: a complete guide

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Yes, the analysis of Budapest's property market is included in our pack

Thinking about investing in real estate in Budapest? You're not alone!

Many people are captivated by Budapest's romantic ambiance and dream of owning a charming apartment or a historic townhouse in the city.

Does it make sense from a financial perspective, though? Are property prices increasing in Budapest? What is the price per sqm? Is it better to buy in Buda or Pest? Is there any hidden tax? What yields can I expect?

We have all the answers you need.

The Investropa team has thoroughly explored this market. Actually, we've gathered all our findings in a pack. Get it now.

In this article, we're happy to share useful information with you.

How is the real estate market in Budapest?

Are property values increasing or decreasing? Let's check the latest data and statistics.

Types of properties

In Budapest, you can find various types of properties for sale, including apartments, houses, and commercial spaces.

Apartments range from cozy studios to spacious multi-bedroom options, often located in vibrant neighborhoods with easy access to amenities. Houses come in different styles, like traditional Hungarian homes or modern designs, and can be standalone properties or part of gated communities.

Commercial spaces encompass offices, shops, and restaurants, often found in bustling city areas, suitable for business ventures.

Whether you're looking for a place to live or invest, Budapest offers a diverse selection of properties to suit different preferences and needs.

Buying vs Renting

(If you're keeping it for yourself and not renting it)

Whether you've already made Budapest your home or are contemplating it for the future, you might be considering the buy vs. rent dilemma in this vibrant Hungarian capital.

Without a doubt, it's better to buy if you want to build long-term wealth and have more control over your living space.

To make a good decision, look at the property price-to-rent ratio. You can think of it as the time it takes for rental income to equal the property's current purchase price.

According to Numbeo, the property price-to-rent ratio in Budapest is around 31.2, which is significantly above the world average.

It shows that it's quite expensive to purchase a home in Budapest. However, it might still be worth it if property prices increase in value.

Property prices in Budapest

On average, according to the last data from Hungarian Central Statistical Office, purchasing a property in Budapest would cost you around $4,820 per square meter.

Clearly, there is a substantial range. A flat in the historical center of Budapest may have a different price per square meter than a modern apartment. We actually give you a more detailed breakdown in our pack for buying property in Budapest and in Hungary.

To put things in perspective, it means that, instead of buying an apartment in Paris or London, you can afford 3 properties in Budapest.

However, housing prices in Budapest are higher (38%) than in Prague.

The most expensive neighbourhoods in Budapest are probably Districts 5, 6 and 2, while the cheapest districts are usually Districts 10, 11 and 18.

Trends

First, let's acknowledge that Hungary is known today for being a stable country. The last Fragile State Index that has been reported for this place is 50.8.

Don't forget this when considering the advantages and disadvantages of buying a property in Budapest.

If we look at the IMF’s forecasts, we can see that Hungary's economy is expected to soar by 11.9% in the coming 5 years, resulting in an average GDP growth rate of 2.4%.

If you're about to invest in real estate in Budapest it's a good thing because an expanding economy (usually) leads to higher incomes for citizens, enabling them to invest in real estate, which boosts demand and prices for properties.

Also, in Hungary, the average GDP per capita has changed by 13.3% over the last 5 years. It is significantly higher than the global average.

According to this data point, property prices in Budapest might go higher in 2024 and also later on.

Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Hungary right now.

Buying property in Budapest

Buying real estate in Budapest can be difficult due to the lack of reliable and updated information on the market. That's why we have created the pack to buy property in Budapest and in Hungary.

Buying process

Inside our pack, we've outlined the complete buying process, including a detailed breakdown of prices and yields per area, tips for negotiating the price, and information about mortgage options.

Here, we're presenting you with a more straightforward version.

This is the step-by-step process to purchase a property in Budapest:

1. Research Budapest's property market and set a budget in Hungarian Forints (HUF).
2. Engage a reputable real estate agent familiar with Budapest's neighborhoods.
3. View properties and shortlist based on your preferences and Hungarian regulations.
4. Conduct due diligence, including checking the property's Land Registry extract (Földhivatali Kivonat) and Title Deed (Tulajdoni Lap).
5. Make an offer and negotiate terms, keeping in mind the specific local customs.
6. Sign a preliminary contract (Előszerződés) and pay a deposit, usually 10% of the property price.
7. Hire a lawyer who understands Hungarian property law for legal assistance.
8. Obtain necessary permits, such as the Approval for Acquisition of Real Estate (Ingatlan Megvásárlásának Engedélye).
9. Finalize the sales contract (Adásvételi Szerződés) with the seller, signed in the presence of a notary (közjegyző).
10. Pay the remaining balance and transfer ownership at the Land Registry Office (Földhivatal).
11. Register the property at the Cadastral Office (Közös Képviselő Irodája).
12. Celebrate your successful property purchase in Budapest!

Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Hungary.

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Where to find a property

Below is a list of websites where you can find properties in Budapest to help you in your search:

• Tower Investments - Specializes in yield-generating properties, new builds, classical apartments, luxury properties, and commercial units.
• StartHome Budapest - Offers a wide range of luxury apartments and houses for rent in various districts of Budapest.
• Ingatlan - Provides a wide range of options, including newly-built projects and luxury homes in Budapest and other cities.
• Matthew & Daniel's - A trusted real estate agency in Budapest, Hungary, and a member of the A1 Group. They offer services for selling, buying, and investing in properties.
• Clark and White - Offers personalized service to meet your unique needs and help you find your dream property in Budapest.

Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Hungary.

Which properties for which budget?

As mentioned before, the average price per sqm in Budapest is $4,820. A 1-bedroom property of 60 square meters would cost approximately $289,000, while a 2-bedroom of 85 square meters would cost approximately $410,000.

However, prices will change based on both the property itself and its location.

Prices are usually steeper in the upscale parts of Budapest. In District V, a residence might cost around $1,170,000, whereas a house in District VI could be priced at $840,000.

But there are less expensive options in certain locations. You might discover an apartment in Angyalföld for $160,000, or you may find an apartment in Újlipótváros priced at only $130,000.

We give a more detailed pricing list in our full pack for buying property in Hungary.

Risks and pitfalls

Here are the main pitfalls specific to buying property in Budapest, Hungary:

• Historical Building Regulations: Budapest's rich history means properties may have stringent renovation and preservation rules, affecting your plans and budget.
• Foreign Ownership Restrictions: Some areas have restrictions on non-EU citizens owning property, requiring additional approvals and paperwork.
• Complex Legal Processes: Hungarian property laws and contracts might be intricate, necessitating professional legal assistance for non-native buyers.
• Communally Owned Land: Certain properties share land with other owners, potentially leading to disputes and limitations on property usage.
• Heritage Site Limitations: Buying near heritage sites may come with restrictions on renovations or modernizations, limiting investment potential.
• High Conversion Costs: Converting commercial properties to residential ones can be costly and time-consuming due to strict regulations.
• Gated Community Rules: Some residential areas in Budapest have strict community rules that could impact your lifestyle choices and modifications.
• Underground Bunkers: Older properties may have underground bunkers from Hungary's past, which could pose challenges during renovations and may not align with your plans.

We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.

Everything you need to know is included in our Hungary Property Pack

Living in Budapest

Living in Budapest is a great experience, with its vibrant culture, beautiful architecture, and diverse neighborhoods offering something for everyone looking to buy property.

Cost of living

The cost of living in Budapest is relatively low compared to most other European cities. Prices for basic goods and services are often lower than in other major cities, making it a great destination for budget travelers.

Here are some examples to better understand the cost of living in Budapest:

• Monthly rent for a one-bedroom apartment in the trendy District VII: $700-$1000
• A glass of local Hungarian wine at a bar in the Jewish Quarter: $4-$6
• Traditional Hungarian meal, like goulash, in a local restaurant: $8-$12
• Public transportation using the BKK system for a month: $35-$40
• A bottle of Palinka (Hungarian fruit brandy): $10-$20
• Coffee at a popular local café, like New York Café: $3-$5
• Entrance fee to the Széchenyi Thermal Bath: $20-$25
• Buying groceries at a local market, like Great Market Hall: $30-$50 per week.

Neighbourhoods and spots

Since we want to make information easy to understand, we've made a table showing the different parts of Budapest. For yields, prices and rents, check our property pack.

Life in Budapest

Budapest has a strong, diverse economy with a wide range of industries, from finance and IT to tourism and manufacturing. The city is a major hub for regional and international business, with a large number of multinational companies located in the city.

Analyzing the IMF's data, Budapest's GDP contributes to nearly 30% of Hungary's GDP. That's a good thing because residents of cities with solid economies usually enjoy better quality services, contributing to a higher standard of living.

What expats usually like the most in Budapest is the city's unique culture and history, as well as its vibrant nightlife and delicious cuisine. Additionally, the city's affordable cost of living and stunning architecture make it a great destination for expats.

Regarding safety, the crime rate of Budapest is around 35, which is average. Budapest has a strong police presence and a culture of respect for the law, which helps to keep crime levels low.

A good point for a property investor - Budapest has a comprehensive mass rapid transit system, consisting of 4 metro lines, 4 suburban railway lines, and several bus, tram, and trolleybus lines.

Access to healthcare in Budapest is good, with a Healthcare Index of 52. An effective healthcare infrastructure always boost the appeal of a place, which is good for real estate.

Finally, it is worth noting that the Semmelweis University ranks among the top 250 universities in the world.

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Renting out in Budapest

This section is for those who are looking to purchase a property not to live in themselves, but to rent it out and make an income from the rental.

Long-term

Tenant Profiles in Budapest

According to the data reported by Wikipedia, the home ownership rate in Hungary is 92%, which is very high.

It is probably a bit less in Budapest which is quite different from the rest of the country.

If you decide to buy and rent out to long-term tenants, you should target students, young professionals, and expats looking for a more affordable living option in Budapest. Additionally, more affluent tenants looking for luxury apartments and short-term vacationers are also potential tenants in Budapest.

Here is a little summary table we've made for you.

Rental yields

As of today, rental yields in Budapest are floating around 2 or 3%. It's low. A good rental yield is typically considered to be around 7% or higher.

Rental properties located in central Budapest tend to have the best rental yields, since there is strong demand for short-term rentals from tourists and expats in these areas. Additionally, properties located near public transportation hubs tend to have higher rental yields due to the convenience they offer.

For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.

Finally, be aware that rental incomes in Budapest are taxed at 15%, which is not much.

Short-term

You could also decide to rent short-term to international students studying at the universities in Budapest, or to tourists visiting the city for a short period of time.

If you decide to go with that option, look for properties in the city center near the Danube River, particularly in the 5th and 6th districts, as they are the most popular areas for tourists. Additionally, properties near the Corvin Promenade in the 8th district are also a great option for short-term rentals.

Currently, there are approximately 10,000 active Airbnb listings in Budapest, reflecting a highly dynamic and bustling short-term rental market. The average daily rate stands around $69.

You have the opportunity to generate a nice additional income stream then. Based on feedback from online testimonials and data analytics platforms such as AirDNA, Guesty, and Inside Airbnb, people who offer short-term rentals in Budapest can make around $1400 per month. Also, the average occupancy rate is estimated at 77%.

Is it worth buying real estate in Budapest then?

Buying a property in Budapest can be a fantastic investment if you're in it for the long haul. Budapest's property market offers a diverse range of options, from charming apartments to modern houses, making it suitable for both living and renting out.

If you're looking to build wealth and have control over your living space, purchasing property in Budapest makes sense. Despite a high property price-to-rent ratio, which suggests buying is expensive, it can still be financially sound in the long run if property prices appreciate. Moreover, Hungary's stable economy with expected GDP growth and higher GDP per capita over the last 5 years indicates potential for property value growth.

However, buying may not be ideal if you're planning a short-term stay in Budapest, as transaction costs and market fluctuations might not justify the investment. Additionally, navigating Hungary's intricate property laws and regulations can be challenging for non-natives, so professional legal assistance may be necessary.

Foreign ownership restrictions and potential complications near heritage sites also warrant caution. Ultimately, the decision hinges on your specific situation and investment goals, but for those seeking a long-term commitment and a piece of Budapest's vibrant real estate market, buying a property can be a rewarding venture.

Make sure you understand the real estate market in Budapest

Don't rush into buying the wrong property in Hungary. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

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The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.