Despite recent scenes in Budapest depicting problems arising from the refugee crisis, local estate agents have been quick to say the property market remains vibrant. Jay Yeo, director at estate agency Rooste, explained that although Hungary’s image might have taken a hit, property continues to boom, with residents turning to houses as a way to invest and foreign buyers capitalising from the buy-to-let market.
Between 2008 and 2013, the number of sales in Budapest almost halved; however, in the subsequent two years people have become more trusting of their jobs and salaries and, as a result, have begun to invest once again. The first half of 2015 saw a rise of 40% in the number of transactions compared to 2014, for example, and house prices in some areas of Budapest have gained by 20% over the past 12 months, driven by low base rates and high rental yields of between 6% and 9%. Although such property gains might be bad news for locals, prices for foreign investors remain relatively inexpensive; for example, €150,000 (just over £110,000) can buy a 100-square-metre apartment in the fashionable eighth or fifth districts.
Speaking about the move by foreign investors in taking advantage of the buy-to-let market, Mr Yeo says renting to tourists is becoming particularly attractive. ‘There is a small pocket of the city [located around the fifth district] that has about 90% of the Airbnb rentals,’ he said, adding that he believes prices will continue to gain. ‘We have a lot of clients whose investment priority is stability, and Budapest is a good place for that. You can just lock your money in an asset and leave it.’
Prices are now beginning to rise above the affordability line for local buyers, which means many inner-city apartments are being bought by foreign investors. Tower International sales partner Krisztina Meszaros explained that Budapest is beginning to develop a new expatriate dynamic. ‘If you looked around five years ago, I’m sure most people were Hungarian,’ she said. ‘But now this picture is changing.’ One area particularly popular with foreign tourists is the fifth district. This upmarket area is host to many monuments, including St Stephen’s Basilica. To gain views of the basilica and enjoy outlooks over Szabadsag Square, buyers can expect to pay around €355,000 for a one-bedroom penthouse.
Those looking to invest in Hungary need to pay attention to local laws; for example, public administration office authorisation is required before any purchase can take place at a cost of €300. There is also a fee of around €10 for owners wanting to let their homes on short-term arrangements and local solicitors’ fees for the right purchasing contracts are generally between 1% and 2%. This may not put many people off, however, considering the current prices. A 100-square-metre penthouse near the parliament buildings costs €250,000, for example, while €750,000 can buy a 600-square-metre family home with a pool and city views and €2.5m secures a villa with six bedrooms, a pool and spa.