Sep 3, 2010

Property Prices in Budapest

This article is the first in a series highlighting trends in the real estate market, in particular the buying market, in Central Europe. In this article, Dávid Ábrahám, key account manager working with luxury properties in Budapest, gives his take on recent price trends.

Key Takeaways:
-Prices for the majority of luxury properties in Budapest have remained flat, some are trending down.
-Many sellers are holding onto their property in anticipation of a better buying climate. Well-priced properties remain on the market for a rather short time.

Sale prices in Budapest: Is now the time to enter the market? 
Dávid notes that prices in the luxury property market in Budapest have gone in two directions: flat or down. Properties can be overpriced, but about 70% of owners are unwilling to lower their prices, he explains. If an asking price hasn’t decreased, it’s unlikely that it will. Instead, the property will remain vacant for as long as three to five years while sellers await more favorable market conditions. On the other hand, motivated sellers are pricing their properties at average or below-average levels, creating a separate, more fast-paced sales market. Buyers find themselves competing for well-priced properties that are new to the market, Dávid says. This competition will pick up as the busier selling period begins in mid-September. The bottom line is that when buyers are flexible and decisive, they gain an advantage in price.

What is the demand in short and long term?
The investment climate here is mixed. Turmoil is gripping markets as the Forint weakens and the deficit remains elevated. Still, longer term potential is evident. Before the crisis, Hungary was a top performer in the former Eastern Bloc countries. Hungary and other Central European countries are attractive for businesses expanding operations due to their educated workforces and stable political, economic, legal and infrastructure capabilities. Infrastructure developments here are evident; they include a new metro line and improvements to streets and parks.

Are there financing risks?
It is an ideal time to enter the Hungarian property market, particularly for those able to secure a mortgage in their home country. The Hungarian forint has weakened this month against the dollar, euro, pound and Swiss Franc. Last Tuesday, the forint traded at a record high 222.42 against the Franc. This is a great concern for owners here, where 55% of mortgages are denominated in Swiss Francs.

As the real estate market emerges from the recession, property buyers and investors are monitoring prices and waiting for the ideal time to buy. If you are an expat already living in Central Europe, consider the earning potential of purchasing a property while you are here. If you are outside of the region, there are still profits to be made when enlisting the services of property management firms and others to assist in a home investment.

Dávid Ábrahám handles the sale of properties from 400 000 to 6 million EUR in Budapest.
To contact him, call or write an e-mail
Mobile: +36 70 930 3821
Tel: +36 1 880 3264

1 comment:

  1. Benny the GreekJune 07, 2011

    Nice attempt to talk up a stagnant market.

    The final remark "there are still profits to be made when enlisting the services of property management firms and others to assist in a home investment" made me chuckle. Put it like this, are you open to taking on a share in your client's property investments, rather than a commission?