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1024 Budapest Hungary

Attorney's phone number Tel.: +36 1 316 9233
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Attorney's office e-mail info@drlittner.hu

Strong start to the holiday home buying season at Lake Balaton

napi.hu, 25.05.2017. – According to a large property agency approximately 600 properties changed their owners around Lake Balaton in the first four months of the year. The majority of buyers are still Hungarians and prices in the most popular areas equal those in Budapest. In places with more difficult access from the capital – especially by public transport –, e.g. in Badacsonytördemic, Badacsonytomaj and Balatonberény, prices average at HUF 100-150,000. In Balatonfüred, on the other hand, apartments cost HUF 575,000 per square metre and those in Tihany fetch about HUF 700,000 while those directly at the lakeshore are even more expensive at HUF 1,000,000 per square metre. Along the Southern shore of the lake there is still a growing interest for holiday properties or even building plots situated closer to the lake. Properties farther from the water are, predictably, less sought after, especially if they are multi-story houses with 200 square metres or more, mainly from the “Zimmer Frei” period some twenty or more years ago.

Residential property market report

napi.hu, 12.05.2017 – According to a recent residential property market report published by MNB, the National Bank of Hungary, prices in Hungary grew by 15.4 per cent on average last year. This increase can continue at a more subdued rate in 2017. Budapest witnessed the highest increase with 22.5 per cent, which is, however, still lower than the 25-30 per cent seen in previous years. Domestic residential property market is still shaped by rising prices and a growing turnover, and the supply side responded to increased demand with a significant boost of construction activity. The report, which was published for the third time this year, says the increase in demand was supported by favourable household income and labour market trends and low interest rates. MNB experts say neither the increasing volume of residential loans nor the growing average apartment prices are a sign of overheating.

This is how crime rate affects apartment prices

In theory, there is a strong correlation between the crime rate and the property prices of a neighbourhood: security has a well-defined market value. However, in reality this relationship is not that straightforward: “As ever so often, the devil is in the details”, a property market analyst said. 60-70 per cent of the price of an apartment depends on the property’s physical parameters and the rest comes from the quality of the neighbourhood and the quantity and quality of services available locally. Crime and security have a strong influence, but we must also consider what type of crimes the statistics mention.

For example, although according to data published at www.police.hu the crime rate per 1000 inhabitants is the highest in downtown Budapest, apartments here are still some of the most expensive ones in the Hungarian capital: the average offering price of HUF 515 thousand in 2014 increased to HUF 862 thousand by 2016. The districts most severely hit by burglaries are the central ones in Buda (with the exception of District I.), and although the number of reported cases sank by 30-50 per cent in all of them, burglaries are still very frequent compared to the number of inhabitants.

Apartment buyers deterred by prices

napi.hu, 06.04.2017 – According to the transaction volume estimate of a large Hungarian property agency 11 560 apartments changed owners in March in Hungary. March was a strong month on the property market, far stronger than the second half of 2016, even considering the 7 per cent backlog compared to the same month of last year. The recoiling was caused by the earlier surge in property prices which forced the market to take a deep breath while potential buyers waited to see where prices were going next.

March transaction volumes and indeed the increased demand in February indicate a return of buyers to the market, which means the wait for lower prices is over. This is also supported by the increasing proportion of buyers purchasing for themselves as opposed to investors. In total, there were 29.6 thousand property sales transactions completed in the first quarter of 2017 in Hungary. In 2015 and 2016 the same figure was slightly over 30 thousand, while in 2013 it was a mere 18 thousand.

Experts expect a boom in apartment construction

napi.hu, 03.04.2017 – According to experts the number of apartments constructed this year may rise significantly, but a change in VAT legislation and the lack of skilled workers may have an unwelcome effect on the construction industry. A recent survey showed that the number of condominium apartments completed this year will reach 2010 highs, but even last year’s 10 thousand was a four-year record. Experts base their estimate on the number of planning applications mainly in the periphery of Budapest, in larger Hungarian towns and in the vicinity of Lake Balaton, mainly as a result of the 5 per cent VAT. This VAT rate will probably be in force until 2019 only, so – due to the time requirement of planning permission procedures – developers have only one year left to start new projects.

Overpriced properties on the Hungarian market

napi.hu, 05.01.2017 – A recent survey published by the Hungarian Statistical Office revealed that half of all Hungarian residential properties are worth less than HUF 10 million and one-third falls into the HUF 10-20 million category. Only every tenth property is worth more than HUF 20 million and less than five percent have a value of more than HUF 30 million. An apartment whose asking price is unrealistic will be sold with great difficulties only, no matter how strong the market is. Finding the perfect price is a key aspect of a successful sale and experienced  property agents clearly have the edge here.

Overpricing can, in most cases, be attributed to one of two main reasons. In many cases the owner is also attached to the property emotionally and will attempt to reflect this attachment in the asking price. Another reason is the lack of experience: in their entire life, most people have the opportunity to sell two or three properties only, unlike real estate agents who, thanks to their professional experience, have a better overview of market prices.

First Apartment Trivia

napi.hu 14.12.16 – Demand and opportunity tend to arise ever later for young people to have their own first apartment and household. According to data collected by the Hungarian Statistical Office during the past 10 years young Hungarians leave the family home at the average age of 27.5.

During this ten-year period a total of 280,000 young people moved to their first new home, 75 per cent of them started their new life as proud owners. Ten years ago the average purchase price of the first home was HUF 9 million (approx. EUR 28 650 at current exchange rate) and it bought a studio or a one bedroom apartment.

This has also changed during the past decade although HUF 9 million does not seem a lot if we include the properties purchased in small settlements and small towns. An apartment bought for HUF 9 million ten years ago can be worth twice as much today. Only a few fortunate can buy their second apartment without having to sell the first one. The majority adds HUF 3 to 4 million to the selling price and buys an apartment with one or two bedrooms more.

Decreasing apartment prices on the horizon?

napi.hu, 29.11.2016 – There are signs of slowing of the property market, not only in downtown Budapest but in the outlying districts such as South-Pest, too. Prices are stagnating but experts believe they may even start to decrease in the near future. Real estate agents agree that the selling price hike has stopped and is hovering at previous, high levels, but any further growth of supply may result in lower prices. One source of such growth could be the consequence of the exchange rate limit that may increase the monthly instalments of loans denominated in a foreign currency and this, in turn, can force owners to offer their properties for sale. This could bring about a price drop of 5-10 per cent. However, the bargaining margin has not increased yet. Owners of condominium apartments seem very tough negotiators and are not prepared to give discounts exceeding 5 per cent. For detached or semi-detached houses buyers can achieve a little more: 5-12 per cent.

Ruined apartments in the wake of Airbnb

napi.hu, 15.11.2016 – Airbnb is causing more and more problems worldwide. The scheme faces stiff opposition, too, because it poses competition for the hotel industry, reduces the number of apartments available for long-term rental and also results in increasing rental fees. The situation is the same in Budapest, where many Airbnb hosts have already become disillusioned.

A great number of owners joined the Airbnb bandwagon with high hopes a year or two ago. Some had just one single apartment and many of them are now forced to admit that this is not what they were expecting. Their properties have been devastated by foreign tourists, the revenue has been less than they had hoped for and Airbnb requires a lot more work and attention than letting an apartment for the long-term.

Short-term apartment letting involves active marketing, one must follow the dates of important events in the city and amend prices accordingly, and both the apartment and the guests need constant attention, too. If you just post your property for EUR 40 a night and hope for the best — you will be seriously disappointed.

Residential Property Price Outlook

napi.hu, 05.10.2016. – The pre-owned residential property price increase expectations in Budapest are almost the same as in the previous quarter. 28 percent of respondents of a survey expect that prices will go higher and 19 percent said they would go down. The expected overall average price increase for Budapest is still approximately 1 per cent. A material increase of about two per cent is expected in Buda and in the upmarket parts of the downtown areas of Pest. As far as the Eastern and Western parts of the country are concerned, the survey forecasts a price increase of 2 and 3 per cent, respectively, while strong regional differences will prevail. This means the national index is back at where it was six months ago while that for Budapest is somewhat lower than that. Based on the responses building plot prices will increase by 3-6 per cent in the next 12 months.

Tax Authority plans changes

napi.hu, 05.10.2016. – Such changes should give taxpayers a real chance to win their disputes with the authority (currently 80 per cent of all lawsuits initiated are won by NAV, the Hungarian Tax Authority) and to ensure that honest taxpayers are pestered less frequently. However, independent experts say it would not be a good idea to ignore unanimous whistle-blowers (another plan of the management) because they are an irreplaceable source of information.

The management of NAV would also give taxpayers more opportunities to pay their debts. Currently, unpaid tax obligations are subject to forcible collection on the second or third banking day after they have become due. Experts, however, warn that payment warnings and on-site distrainment are more costly than forcible collections from taxpayers’ bank accounts.

Changes in apartment prices between 2014-2016

napi.hu, 03.06.2016 – According to an estimate made by a large Hungarian real estate agency compared to 2014 the average price of used and new apartments in Hungary increased by 11.6 and 6.7 per cent, respectively. In 2015 the prices of used condominium apartments in some districts increased by 1-20 per cent compared to the previous year, while the price of new condominium apartments showed an increase exceeding 20 per cent. The prices of used houses and concrete high rise apartments showed a more moderate increase of 5-15 per cent.

In Q1 2016 apartment prices in Budapest were still on the rise. The increase of used condominium apartments was close to and in some downtown district even exceeded 30 per cent. For new condominium apartments and for concrete high rise apartments the hike was 25 per cent. Houses could be bought at prices almost 15 per cent higher than a year before.

Mood improvement was temporary only, according to new analysis

napi.hu: The most recent, April confidence index of GKI, the Hungarian Economic Research Institute, decreased by the same amount (five points) as it had improved in March. This index has been hovering in a comparatively narrow range at levels lower than previously. Why does production fail to improve faster? One of the reasons is that the lack of workforce now prevents an expansion of production to a much higher degree than before. The limited amount of workforce available mainly disrupts smaller companies with less than 50 employees. Based on seasonally adjusted figures, the short term outlook of Hungarian economy among construction companies did not deteriorate in April compared to the previous month. The ratio of optimistic and pessimistic views was 18 and 17 per cent, respectively – the same as in March.

Heavy fines on black market apartment rentals

napi.hu: According to a survey conducted in Terézváros, the 7th district of Budapest, about 75 per cent of Airbnb hosts evade paying tax either on purpose or out of ignorance. These results are in line with those of international surveys. Failure to issue a proper invoice may result in fines up to HUF 1 million levied by the Tax Authority. The survey used local government property registers, publicly available data at the Airbnb website, and also personal interviews were made.

The Hungarian Tax Authority issued a press release recently to clear up any misunderstandings. The press release confirmed that private persons commercially letting one single room or their entire apartment for accommodation purposes through an online reservation system, such as Airbnb or similar, are legally obliged to issue an invoice and pay income tax, too.

Foreign buyers of Hungarian apartments

napi.hu: The boom of the Hungarian residential property market has raised the interest of foreign investors, too, and buyers from China, Russia, the Ukraine, and the Middle-East have become a regular feature in Hungary. According to 2016 Q1 figures less than 1 per cent of residential property transactions were effected by foreigners, but their ratio was almost 4 per cent in the most popular districts (V., VI. and VII) of downtown Budapest.

Chinese buyers had the biggest share (36 per cent), while another 15 per cent came from another country of South-East Asia. Buyers from the Middle-East had a share of 5 per cent. Judged by their combined share European buyers are still in majority, but the individual proportion of Austrian, German, French, English, Northern or Southern European buyers is small.

Most foreign buyers went for an apartment of 60-80 sq. m. in downtown Budapest at an average price of HUF 45 million.

Apartment rental: tighter rules looming

napi.hu: According to a proposed bill all private persons exploiting their residential properties for commercial accommodation purposes should pay HUF 1500 tax a year for every sq. m. of the property. Each private person could exploit a maximum of three residential properties this way. This would be a simplified but more stringent method of enforcing the principle of equal tax treatment in tourism-related accommodation sharing (such as Airbnb), one of the most popular fields of sharing economy. The frequency of targeted inspections by the tax authority would also be increased. Legislators believe it would also be necessary to align the rules of private apartment rental to those applicable to traditional hotels.

Property prices may surge on account of refugees

napi.hu: In the next 15 years residential property prices may see a significant rise in German cities like Berlin and Hamburg because the growing number of refugees increases demand for residential properties, analysts of German Postbank say, assuming that by 2030 a total number of one million refugees will be granted a permanent residence permit in Germany. According to their results a 1 per cent increase in population triggers a price hike in urban apartment and house prices of 3.5 per cent and 1.9 per cent, respectively. The Eastern part of the country may benefit from the influx of refugees, but cities like Hamburg or Berlin will be facing serious difficulties on account of the increased demand for residential properties. The report says a fact of key importance is that according to Destatis, the Federal Statistical Office of Germany, German population will decrease even if the highest estimates of the number of immigrants should come true.

Residential property prices on the increase – huge differences

Napi.hu – According to an analysis that processed more than 100,000 residential property advertisements the increase of prices may, at first sight, seem dramatic, but the trend is far from general. Between July 2015 and January 2016 the average price of a square m of residential property in Hungary increased from HUF 220,000 to HUF 312,000. The hike was probably caused by the changes in the government’s real estate policy. In the above period the average asking price increased from HUF 323,000 to HUF 403,000. The Western part of the country soared, too, but the performance of the remaining counties was rather varied. One of the key reasons was that the asking price of hard-to-sell properties, mainly larger detached houses, had to be continually decreased. Average prices are likely to grow in popular parts, while in less trendy settlements further price decreases are to be expected.

You could have made a 40 per cent profit last year

Hvg.hu: There is a good chance you could never guess where you should have invested you money in 2015. It is always easy to be clever in hindsight and this is no exception. While demand bank deposits earn next to zero per cent and even sums tied up bring 2-3 per cent maximum, the price of apartments in concrete housing blocks in Buda increased by 41 per cent on average last year — and this happens to be the type of property that sells like hot cakes if you need your money fast. Selling times average at 35 days and buyers have the least margin for bargaining. In contrast, the average selling time of residential houses is six months and sellers will need to be prepared to reduce the price to catch a buyer.

Hungarian residential property prices almost on pre-crisis level

hvg.hu: Residential property prices are still on the increase. In Q3 2014 buyers were facing the same prices as at the turn of 2008/2009. According to figures published by FHB Jelzálogbank there has been a continuous hike in residential property prices since Q2 2014, although the rate of increase has been diminishing gradually. Between April 2014 and September 2015 residential property prices increased by about 25.8 per cent both nominally and in real terms. The number of planning permissions granted (8616, an increase of 1000 over the same period of the previous year) also increased between January and September 2015.  The volume of loans also reflects the boom of the residential property market. In Q3 2015 the value of residential loans granted exceeded HUF 100 billion, an increase of 43.5 per cent over Q2.