Investing in Hungarian real estate pays off

Economic stability, increased wages, moderate interest rates, and low unemployment rates have all contributed to the steep price hike in Hungarian real estate. But those are not the only factors, the government also offers programs to help people buying homes. Below you see the annual increase of Hungary’s national house price index.

Hungarian property prices

Furthermore, the prices of new units in 2018 went up with 18.4% while the prices on the second-hand market increased by 10.8%. At the same time, there was an increase of 4.7% in the number of sold properties on the second-hand market in 2018, which is the sixth year of growth in a row.

Property supply remains stable

Contrary to the rapidly increasing figures on the demand side of the market, the supply of properties remains more or less stable. The number of approved building permits increased by 0.9% in the first 6 months of 2019 (18.227 permits were approved). The number of completed projects was 6.472, a decrease of 0.7%.

Outlook for the housing market

Expectations are that the Hungarian housing market remains its strong position as a result of steady economic growth. In Q2 the Hungarian economy grew by 4.9% compared to the year before while a 4.4% expansion is expected for this year, making it the 7th year of uninterrupted economic growth. Unemployment decreased from 3.7% in 2018 to 3.4% in 2019.

Laws and regulations for foreign buyers

Purchasing real estate in Hungary as a foreigner has to be done through a purchase contract, confirmed by a lawyer. Foreigners also need approval of the relevant Administrative Office when buying property as a private person, a process that takes about 2-3 months. However, it is easier to set up a company in Hungary to buy property, as in this case a permit is not required and the procedure takes no more than 2 days.

Fair rental Yields in Budapest

Budapest is the main indicator of rental yields in Hungary with gross rental yields at 5.6% in Buda (the green and quiet part of town) and 5.2% in Pest (the business and tourist center of the city). These moderate returns come with prices per square meter of EUR 2.000-2.200 in Buda and EUR 2.500 in Pest. Smaller units tend to be cheaper per square meter on both sides of the Danube. Rents per square meter in Buda are between EUR 9.50-11.50 per month while the units in Pest go for EUR 10.60-11. Although rental yields in Budapest are quite acceptable, property transaction costs are rather high.

Taxes and other costs

Hungarian taxes are considered to be average to high. Here are the most common taxes applicable in Hungary.

● Rental income: 15%
● Capital Gains: 15%
● Inheritance: 0% when inheriting from a spouse or family member.
● Income tax: 15%

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