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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
Positive
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 46.2, which is a remarkable score.
Hungary is considered stable today due to its consistent economic growth driven by a strong manufacturing sector and significant foreign investment, particularly in the automotive and technology industries. Additionally, the country's political landscape has been dominated by the Fidesz party, which has maintained a firm grip on power, providing a sense of continuity and predictability in governance.
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
Positive
Before buying a property, take a look at how well the country's economy is doing.
In line with IMF predictions, Hungary will, in 2024, grow by 2.2%, which indicates the country is heaidng in the right direction. As for 2025, the figure we're looking at is 3.4%.
Besides that, the economy will keep growing since Hungary's economy is expected to increase by 12.9% during the next 5 years, resulting in an average GDP growth rate of 2.6%.
The expected sustainable growth rate in Hungary indicates a stable and growing economy, which can lead to increased property values and rental demand, making real estate investments more profitable. Additionally, a stable economy reduces the risk of economic downturns, providing a safer environment for long-term investments.
Let's now look at other metrics.
Hungarian business owners have become pessimistic about the economy
Negative
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 -9 for Hungary. It's a score that can be qualified as "concerning".
Things were different 12 months ago. Business owners were actually rather optimistic and the BCI was at 9.
Business Confidence in Hungary is currently at a negative level. However, this doesn't necessarily mean that the property market will face a significant downturn. A negative confidence score often indicates a temporary phase of uncertainty or caution within the business sector, which is a common occurrence in economic cycles.Therefore, it is advisable to evaluate additional metrics before deciding if it is a suitable time to invest in property in Hungary. This is what we will do here.
Hungary is issuing less building permits
Negative
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 2025.
Hungarian properties are gaining value, month after month
Positive
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.
Everything you need to know is included in our Hungary Property Pack
Hungary's population is getting significantly richer
Positive
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 2025.
Rental yields are not crazy in Hungary
Neutral
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 2025.
Everything you need to know is included in our Hungary Property Pack
In Hungary, inflation is expected to be minimal
Neutral
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 1.0% over the next 5 years, with an average annual increase of 0.2%.
This data infers that Hungary will likely experience almost no inflation. If you buy a property now, you may experience lower appreciation potential and reduced returns on investment.
Is it a good time to buy real estate in Hungary then?
Now it's time to draw our conclusions.
2025 is shaping up to be an excellent time to consider buying property in Hungary, and there are several compelling reasons for this. First and foremost, Hungary is recognized today as a stable country, which is a crucial factor for any real estate investment. A stable environment means fewer risks and more predictability, which is exactly what you want when making a significant financial commitment like purchasing property.
Moreover, Hungary's economy is on a promising trajectory, with an expected growth of 12.9% over the next five years, translating to an average GDP growth rate of 2.6%. This sustainable growth indicates a robust and expanding economy, which typically leads to increased property values and higher rental demand. For investors, this means that real estate investments in Hungary are likely to become more profitable, as the growing economy supports both property appreciation and rental income.
Another factor to consider is that Hungary is issuing fewer building permits, which can lead to a tighter supply of new properties. When supply is limited and demand continues to rise, property values tend to increase. This trend is already evident, as Hungarian properties are gaining value month after month. Coupled with the fact that the population is becoming significantly wealthier, the demand for quality housing is likely to continue its upward trajectory, making now a strategic time to invest.
Finally, the rental market in Hungary offers attractive opportunities, with gross rental yields ranging from 1.7% to 4.4%, according to Numbeo. This, combined with the expectation of minimal inflation, means that your investment is less likely to be eroded by rising prices. All these factors together create a favorable environment for property investment in Hungary, making 2025 a potentially rewarding year to enter the market.
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.
-Will real estate prices go up 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.