It is fair to say that Hungary has not exactly been awash with positive press comments of late after the election of Prime Minister Viktor Orban. Accusations of cronyism, corruption and a political campaign which included anti-migrant rhetoric initially caused the likes of George Soros to withdraw his foundation from the country. However, there are signs that property investors are returning to the region and house prices have reacted in a very positive manner.
High-end restaurants and cocktail bars
It may seem bizarre to highlight the growing number of high-end restaurants and cocktail bars in Budapest but there is no doubt they are attracting the attention of would-be property buyers. Locals readily admit that previously there were many mid-range dining and drinking facilities which attracted stag parties and short stay visitors but not necessarily high-end property investors. However, this is all beginning to change!
The significant improvement in local nightlife facilities reflects the growing improvement in the Budapest infrastructure, shopping facilities and business arena. According to Deloitte the average square metre cost of a new home in Budapest comes in at €1480 which compares very favourably to the likes of Prague at €2368 and Vienna at €3999.
Property price improvements
According to the Hungarian National Bank, property prices in Budapest increased by 14.6% in the 12 months to July 2017. While this was a significant reduction from the previous 12 month increase of 27%, set against the difficult economic background of the European Union, it is still an impressive performance. Hungary’s GDP grew by 4% in 2017 and further growth is expected with many property developers struggling to find sufficient numbers of experienced builders.
It is also interesting to see that the mix of property investors in Budapest has changed significantly over the last 10 years. Irish property investors were extremely active in the region before the 2008 US led mortgage crisis. Over the last few years the number of Irish buyers has fallen to around 10% having been replaced by investors from Russia, Ukraine, China and the Middle East. It is also fair to say that property developers are unable to keep up with existing demand hence the upward squeezing of property prices.
Does politics really matter?
It is interesting to see that despite the “controversial” economic situation in Hungary, overseas investors are still happy to snap up Budapest properties. The comparable figures against the likes of Prague and Vienna make for good reading, investors seem to have bought into the long-term growth forecasts and all of this has occurred under the cloud of a difficult European Union economic and political outlook.
So, this begs the question, do politics really play that much of a part in worldwide property markets once the initial shock and horror of more controversial political decisions has sunk in?
It is fair to say that Budapest is still trying to shake off the “stag do” tag which has hung around the neck of the capital for some time. Great progress has been made, local facilities have been improved, infrastructure investment continues and the Hungarian economy is surprising many. If you just consider comparable costs against the likes of Prague and Vienna there is no doubt that Budapest does offer value for money.