Real Estate To Remain a Growth Lifeline for Hungary Through 2017
January 12th, 2017
Hungarian property market experienced a huge amount of activity in 2016 and has achieved consistently strong prices for properties both of the owner occupied and new built homes. Though all segments of the market are performing extremely well including residential investment properties, the real estate market has become more balanced compared to that of 2015. What to expect when you're expecting to buy or sell a home in 2017?
In 2015 the increase in both supply and demand has had a significant impact especially on the price of the used homes, which carried over to 2016, but the market had become more balanced by then. The average sell-by date had also increased compared to 2015: average sqm prices rose 20 percent to an average of 456 000 HUF per square meter of used homes in Budapest but the price of the new built apartments also increased by 12-20 percent. However, in experts expect new residential real estate investment to remain buoyant for 2017. “In the first quarter of 2016 both the demand and the price level rose due to the interest in the altered the Family Housing Allowance (in Hungarian CSOK) and the market growth started in 2015 but this trend got contained in the second half of July. Demand decreased slightly and selling prices ceased to grow for a while. In August and in autumn residential house market gained further momentum, mainly in the owner-occupied sector.” – explained László Balogh, leading analyst of a leading Hungarian real estate portal.
Smart pricing is key
While in 2015 advertised properties were immediately snapped up, in 2016 houses and apartments were sold in longer time, on average 2-3 extra weeks were necessary, altogether 80-100 days were needed to sell a home. According to the expert smart pricing is key to reach the optimal sell-by date:”In 2016 there were properties which were gone in merely a few hours and there were also marketable offers that managed to find a buyer only within 6 or 8 months. Typically the latter ones were overpriced. “An apartment advertised for a reasonable price – that is still higher than that of last year – can be sold within 3 months”, – explained Balogh.
According to the analyses of the biggest Hungarian real estate website all the most important indicators of the whole house market are achieving better results now in a yearly comparison. The prices of both new and older apartments have grown such as demand and supply. All this shows that real estate markets bounced back from the recession of 2014 in 2015 and beyond that date also in 2016. The number of homes advertised by private individuals was more than twice as many as in 2016 than in 2015, which means that supply has increased considerably. The entire country was characterized by growth: the number of residential property advertisements has doubled both in the capital and in bigger and smaller towns. Meanwhile the level of demand has also risen by 18 % according to the data of ingatlan.com compared to 2015.
Prices of second hand homes have risen significantly: average sqm price of a second hand home in Budapest was 456. 000 HUF at the end of December 2016, which is a 20 % increase in a yearly comparison, parallel with a 38 % growth of demand. Looking at the different types of homes, sqm price of brick apartments in the capital has risen by 19 % up to 499.000 HUF; sqm price of panel apartments has grown by 16 % 334.000 HUF. There has been a milder increase in the price of the residential houses in Budapest; the average sqm price has grown by 11 % 320.000 HUF.
Further increase in the second-hand housing market
According to the expert a growth can be expected in the second-hand housing market in the future. There were 150.000 sales there in 2016, although output remains below its pre-crisis peak, when it was over 170.000. Beside the turnover, there is a space for price growth, especially in Budapest and in bigger towns. „In addition there are reserves to be further exploited in housing loans, which in return can also boost demand in 2017” –added László Balogh.