The Best Places to Buy Property in Hungary

Why Residential Real Estate in Hungary Is a Smart Investment

Hungary is emerging as a hot spot for real estate investment, and here's why according to a report about the Housing Market recently published by Magyar Nemzeti Bank (MNB), which is the central bank of Hungary:

Strong Growth and High Returns:

• Property values are steadily climbing. Budapest and other urban areas are experiencing consistent price increases, with nominal housing prices growing by 9.3% in Budapest and 8.7% in rural cities in the second quarter of 2024. This upward trend points to promising long-term capital appreciation.
• Rental yields are attractive. Investors can expect solid returns, with average rental yields at 5.1% in Budapest and a robust 7.2% in rural cities. This presents an excellent opportunity for generating passive income.

Favorable Economic Conditions:

• The economy is supportive. Decreasing inflation, real wage growth (7-8% in 2024), and government programs like CSOK Plus are boosting purchasing power and driving market activity.
• Demand is surging. Transaction volumes are up over 16% nationwide, with a remarkable 31% increase in Budapest during the third quarter of 2024. Reduced loan interest rates and increased household savings are further fueling this demand.

Stability and Incentives:

• The market is stable. Despite global economic uncertainties, Hungary's real estate market remains resilient, supported by structural stability and government incentives.
• Investment is encouraged. The government is actively promoting real estate investment with initiatives like tax-free utilization of pension savings for housing investments.

In conclusion, whether your goal is long-term capital appreciation or steady rental income, residential real estate in Hungary offers a compelling and potentially lucrative investment opportunity in a stable and growing market.

Increasing Demand and Limited Supply

Hungary's residential real estate market is characterized by a compelling imbalance: surging demand alongside constrained supply. In 2024, the housing market witnessed a significant uptick in transactions, with demand intensifying due to favorable macroeconomic conditions such as rising real incomes and declining mortgage interest rates. 

At the same time, the supply of new homes has struggled to keep pace. The construction of new housing units in Hungary, particularly in Budapest, has stagnated, with an 18% decrease in new housing completions compared to the previous year​. This bottleneck in supply, combined with limited availability of land and higher construction costs, has pushed prices higher.

Real Estate as a Hedge Against Inflation

Investing in residential real estate provides a powerful shield against inflation. Historical trends in Hungary's real estate market highlight consistent price growth, with urban areas like Budapest showing double-digit annual increases in recent quarters​. Unlike savings eroded by rising costs, property investments often appreciate in value, preserving and even enhancing purchasing power over time. 

Furthermore, the demand for housing remains robust, fueled by improving macroeconomic conditions, increasing real incomes, and favorable lending environments​. These factors not only make real estate a secure investment but also an opportunity for financial growth amidst inflationary pressures.

Key Factors to Consider Before Buying Property in Hungary

Don't jump in blind! Hungary's real estate market is dynamic, with varying trends across regions. Before you invest, research key factors like:

• Price per square meter: Understand how prices differ between Budapest, other cities, and rural areas.
• Rental yield potential: Analyze average rental yields in your target location to estimate potential income.
• Demand shifts: Stay informed about factors influencing demand, such as infrastructure projects or new regulations.

Location, Location, Location!

This golden rule holds true in Hungary. Urban areas like Budapest generally offer:

• Higher demand: This translates to better potential for long-term appreciation and rental income.
• Greater liquidity: It's usually easier to sell your property in a high-demand area.
• Keep an eye on the future: Research planned infrastructure developments or zoning changes that could impact property values.

Navigate the Legal Landscape

Purchasing property in a foreign country comes with legal complexities.

• Foreigner regulations: Be aware of any specific requirements for foreign buyers, such as permits for certain areas.
• Seek expert advice: Consult with a local legal expert to ensure a smooth and compliant transaction.

Budapest And its Rich Opportunites

Budapest – the capital city of Hungary - stands out in the domestic market, it is the economic engine of Hungary with an advanced infrastructure and a stable labour market, moreover tourism flourishes in the city. Budapest is divided into two parts by the river Danube, Buda and Pest, with each side having its own characteristics and charm.

Buda

The Buda side has lots of hills where you can find real estate with breathtaking panorama, but closer to the Danube Buda also has a more urban scene as well with lots of fresh property development. New neighbourhoods are continuously built, especially in the southern part of Buda, in district XI.

Properties in districts II, XII and I are among the most expensive in the whole of Hungary. In these areas, prices per square metre are well above the national average, thanks to exclusive locations and premium living environments. These districts offer primarily a long-term investment strategy, as property values in these areas are rising steadily. The infrastructure, excellent educational institutions and good transport all contribute to making these locations attractive to families and foreign investors.

Pest

Pest is known for offering diverse choices, with a much wider range of property prices, it can be great for both premium and mid-range investors. The inner-city districts, such as districts V, VI and VII, are popular with tourists and young people, making them ideal for short-term rentals. The rental prices of Pest are ever growing, with a 12% growth rate compared to last year.

Buda vs Pest: where to invest?

• Prices: in Buda, property prices tend to be higher but more stable, while in Pest, there is a wider price range.
• Rental market: short-term rentals predominate the inner districts of Pest, while in Buda the long-term, premium rental market is more common.
• Value growth: property values in Buda show slower but stable growth, while Pest offers more dynamic but volatile opportunities.

Pest County Suburbs: Growing Demand and Value

In recent years, the municipalities of Pest County, especially in the immediate vicinity of Budapest have experienced a high level of interest in the real estate market. The popularity of the agglomeration can be explained by the following factors:

Proximity to Budapest: settlements such as Budaörs, Érd, Dunakeszi or Szentendre are ideal choices from a transport point of view, as they offer excellent connections to the capital via motorways or railways.

A lifestyle close to nature: people living in the agglomeration can enjoy the closeness of nature without being completely cut off from urban amenities. This is particularly attractive for family buyers.

Developing infrastructure: in recent years, many municipalities have seen significant investment, including improvements to education and better transport, which further increases the value of property.

Where to look?

Dunakeszi and Fót: these cities offer more favourable prices in the northern agglomeration of Budapest, while the region's developing infrastructure and residential parks make it attractive to investors.

Vecsés and Gyál: close to the M0 motorway, these cities are popular for their logistical advantages and proximity to the airport.

Érd and Diósd: the southern agglomeration is a great choice for families, promising stable long-term value growth.

Other Major Hungarian Cities

Large rural cities such as Debrecen, Győr, Szeged, Pécs and Kecskemét are also a strong alternative for investors.

• Debrecen: The second largest city in the country is a prime investment destination with its constantly expanding industry and international investments, such as the construction of the BMW factory. Property prices are rising but are still lower than in the capital.
• Győr: Known as the centre of the automotive industry, the city offers excellent labour market prospects and a stable real estate market. Its proximity to the M1 motorway increases its attractiveness for international tenants and buyers.
• Szeged: With its vibrant university life and affordable property prices, Szeged is an ideal investment destination, especially for those looking for rental apartments.
• Kecskemét: Real estate prices are rising because of automotive investments, such as the Mercedes factory, and the city's infrastructure development is also making it attractive to investors.
• Pécs: Although property prices are lower than in other cities, its role as a cultural and educational centre offers long-term opportunities.

Hungary's real estate market is diverse, offering investors a wide range of options, from luxury locations to emerging hidden gems. With careful planning and analysis, based on current market trends and data provided by Hungarian Central Statistical Office, a significant return can be achieved by choosing the right property.

Conclusion

Ultimately, the ideal Hungarian property hinges on your individual needs and goals. By carefully weighing your budget, purpose, desired lifestyle, and the legal requirements, you can confidently invest in a property that brings you long-term satisfaction.

With substantial household savings and maturing government bonds, 2025 is expected to see increased investments in housing, further bolstered by the tax-free use of voluntary pension savings for housing purposes.

Take the next step towards your Hungarian property dreams. Contact us for comprehensive resources and expert guidance on navigating the Hungarian real estate market!