Buying real estate in Hungary?

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Is it a good time to buy a property in Hungary in 2024?

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

Are you considering buying real estate in the land of Thermal Baths? Are you unsure if now is a good time to make a move?

When it comes to market timing, everyone has their own opinion Your Hungarian acquaintance might suggest that now is a perfect time to invest in property, whereas your spouse, who is originally from Budapest, might have a different view and recommend waiting for more stability.

At Investropa, when we create articles or update our pack of documents related to the real estate market in Hungary, we base our work on reliable data and statistics, rather than relying on subjective opinions or hearsay.

We have carefully gathered and analyzed official reports and government website statistics. Using this information, we have created a reliable database. Here's what we found that can help you decide whether it's a good time to buy real estate in Hungary.

Enjoy your reading!

How is the property market in Hungary now?

Hungary is known today for being a stable country


Stability should be the first thing you look at when you want to invest in real estate because it fosters a thriving market environment. It is an information you need as a foreigner buying a property in Hungary.

Good news for you, Hungary is known for its stability. The last Fragile State Index reported for this country is 50.8, which is a remarkable score.

Hungary has a strong economy and a stable political system, which has allowed it to remain a reliable partner in the region and the world. It is also a member of the European Union, which has helped to ensure its stability and prosperity.

Real estate investors can count on the country's stable foundation for investment. Let's review the economic outlook.

Hungary is poised for strong growth


Before buying a property, take a look at how well the country's economy is doing.

In line with IMF predictions, Hungary will, in 2023, grow by 0.6%, which is not much. Regarding 2024, the figure we're looking at is 3.2%.

However, this modest figure is only temporary, as Hungary's economy is expected to increase by 11.9% during the next 5 years, resulting in an average GDP growth rate of 2.4%.

The expected sustainable growth rate in Hungary provides a positive outlook for potential real estate investors, as it indicates that the market is likely to remain stable and prosperous over the long term. This stability gives investors the confidence to make investments with the expectation of a reasonable return on their investment.

Let's now look at other metrics.Hungary gdp growth

Hungarian business owners have a neutral outlook towards market conditions


The GDP forecast is important, but since it's made by a foreign institution (the IMF), it doesn't give us any insight into how people in Hungary perceive their local economy. Luckily, in Hungary there is an official metric that is consistently updated. This doesn't apply to every country, so we're in luck.

The Business Consumer Index (BCI) is a measure of business leaders' confidence in both the current and future economic conditions. It's determined through surveys and assessments.

The GKI Economic Research Co. reports that the Business Confidence Index has reached a value of -5 for Hungary. It is definitely a small score.

There hasn't been significant change, considering that the BCI score, 12 months ago, registered at 1.

Business Confidence in Hungary is currently not at its peak. However, this doesn't necessarily imply that the property market will experience a significant downfall. A lower confidence score often signals a temporary phase of uncertainty or prudence within the business sector, which is a typical occurrence in economic cycles.

Consequently, it is advisable to assess additional metrics before determining whether it is an opportune moment to invest in property in Hungary. This is what we will do here.

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buying property foreigner Hungary

Hungary is issuing less building permits


If you're thinking of investing in property in a country, it's helpful to look at how many permits have been given for real estate projects. When there is an uptick in building permits being delivered, it means that the property market is seeing increased interest and activity.

Unfortunately, the number of building permits issued is decreasing in Hungary.

In the period of the last 12 months, according to ungarian Central Statistical Office, the number of building permits issued by the Hungarian municipalities fell by 22%, from 16,463 to 12,846 units.

This is definitely a red flag. Let's consider more data to get a better understanding.

One last thing to note though. Less building permits means less real estate supply. If it's the case, then property prices will increase in Hungary in 2024.

Hungarian properties are gaining value, month after month


Hungary's home prices have increased by 94.2% in 5 years according to eurostat.

It means that if you had bought an apartment in Budapest for $180,000 five years ago, then it would now be worth around $350,000.

The growth in the market is evident and continues to accelerate with each passing month. It's actually one of the fastest growing real estate markets in the world.

There's no doubt that it's a positive signal. Property prices have been consistently increasing and it's likely that they have not reached their peak yet.

You can find a more detailed analysis of the real estate prices in our property pack for Hungary.Hungary housing prices real estate

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

Hungary's population is getting significantly richer


When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:

  • a growing population means more people needing homes
  • a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)

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.

This means that, if you purchase a historic apartment in Budapest and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.

If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is set to increase in cities like Budapest or Debrecen in 2024.

Rental yields are not crazy in Hungary


Rental yield is a common measure in real estate investing.

It indicates the percentage of profit you can earn by renting out the property.

According to Numbeo, rental properties in Hungary offer gross rental yields ranging from 1.7% and 4.4%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Hungary.

It means that the income potential from a real estate investment is relatively moderate.

As previously discussed, it's possible that housing prices could rise (because there will be a limited supply of available homes). However, on the other hand, there will be a significant increase in the number of wealthier tenants interested in renting. Consequently, rental yields will probably remain stable in Hungary in 2024.

Hungary rental yields

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

In Hungary, anticipate strong inflation


In two words, inflation is when prices rise.

It's when your usual serving of goulash costs 2,500 Hungarian forints instead of 2,000 Hungarian forints a couple of years ago.

If you're contemplating investing in a property, high inflation can bring you several benefits:

  • Property values tend to increase over time, leading to potential capital appreciation.
  • Inflation can result in higher rental rates, thereby boosting cash flow from the property.
  • Inflation reduces the real value of debt, making mortgage payments more affordable.
  • Real estate can act as a hedge against inflation, preserving the value of the investment.
  • Diversifying into real estate provides stability during inflationary periods.
  • Tax advantages, such as depreciation deductions, can help offset the impact of inflation.

As projected by the IMF, the inflation rate in Hungary will increase by 21.6% over the next 5 years, with an average annual increase of 4.3%.

This data infers that Hungary is anticipated to encounter inflation, making it a potentially opportune time to buy property. If the property's value increases over time, you can sell it at a higher price and make a profit.

Is it a good time to buy real estate in Hungary then?

Now it's time to draw our conclusions.

Without a doubt, 2024 presents a compelling opportunity for property investment in Hungary, as evidenced by a combination of favorable signals that indicate a promising investment climate. Hungary's reputation for stability provides a secure foundation for investors seeking a reliable environment for their assets. This stability minimizes potential risks and ensures the long-term value of real estate holdings.

With Hungary poised for strong growth, the country's economic prospects make it an attractive choice for property investment. As Hungary actively fosters economic expansion, both through domestic initiatives and as a central player in the European market, the potential for increased property values and rental income becomes pronounced.

The consistent increase in Hungarian property values signifies a growing demand for real estate. This trend reflects positive market dynamics, potentially leading to capital appreciation for property investors. Moreover, the growing wealth of the Hungarian population can further fuel the demand for housing and contribute to the potential for long-term property value growth.

Anticipated strong inflation, while a concern in some cases, can work in favor of property investors in Hungary. Inflation can drive up property values, benefitting those who own real estate as an inflation hedge. This dynamic, combined with other favorable and neutral signals, positions 2024 as a favorable year to explore property investments in Hungary.

Although less building permits might be a negative signal, the overall investment landscape in Hungary remains positive. The country's stability, strong growth prospects, increasing property values, growing population wealth, and the potential benefits of inflation collectively make 2024 a propitious year to consider property investments in Hungary.

We genuinely hope this article has provided you with helpful information.. If you need to know more, you can check our our pack of documents related to the real estate market in Hungary.

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

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