Hungary Property Market Overview

The Hungarian property market has been plagued with problems for investors for many years now and still shows no sign of improving.

Hungary is located in the centre of Europe and has attracted a large amount of FDI, yet its performance both economically and in the property market leaves much to be desired.

Political incompetence has not helped the situation and the government has been unable to control its spending and stimulate growth. Both government and individual debt is relatively high and much of it borrowed in Swiss Francs, hence the currency risks are high – and are currently hurting the country substantially.

Mortgage finance, one of the keys to investing, in Hungary for foreigners is not easy to obtain and are typically only around 50% LTV, with interest rates around 6%.

Furthermore, property price growth has been poor and again has started falling due to the economic crisis.

Economic underperformance, poor finance and lack of capital growth or good rental returns means Hungary remains a relatively unattractive property market compared to many of its neighbours.

Budapest

Being one of the major capital cities of the recent EU entrants Budapest has attracted many investors in search of making money in the property market there.

This initial wave of investment helped prices increase but there was not the local demand to support further growth and for the last few years the property market has been oversupplied. Price growth has been weak and rental yields low.

There is little sign of this changing and it will take sustained government reforms to stimulate the economy sufficiently and give the locals the confidence and ability to buy property in greater numbers.

Many of the other Central and Eastern European capitals offer far better opportunities for much lower risk.