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Boom of rental prices coming to a halt in Hungary

 

Position - Image Credit:Creative Commons – Barney MossImage Credit:Creative CommonsSheila Sund

 
   Boom of rental prices coming to a halt in Hungary according to an article in Hungary’s version of The Economist - HVG. The article details trends in the Budapest and Hungarian rental market(s) based on a statistics compiled by local real-estate portal ingatlan.com over a 12 month period. Though the findings of the article are general, it does give a good overview of the market as a whole.  

     While the residential property market is currently stirred by the Hungarian government’s new subsidised loan program (CSOK), this program primarily effects the new property market and has longer term effects. Meanwhile in other property segments there are other significant changes, namely on the rental property market which has seen an upward spiral last year but is now showing some trend changing signs.
A research was made by the large property portal „ingatlan.com”  with a total of 5 thousand property ads, and they compared the rental prices of the most popular 50-70 square meter apartments with last February data.

The results of the study show that in February this year the national average rental price for a 50-70 m2 flat was at 150,000 HUF, which is a 7 percent growth compared to last year. „It might mean at first reading that last year’s growing trend seems to continue, however if we look at the detailed figures, the situation is very different. Namely because the national average is improved by the higher prices in Budapest, whereas rental prices reaching almost unrealisticly high growth levels seem to come to a halt here.

According to the portal’s research a Budapest apartment between 50-70 m2 was offered at a price of 160,000 Huf on average this February, which is the same as the figures from last year. „It is mainly that number which shows that rental price increase has stopped. Of course there are still some districts showing a significantly high increase despite the stagnating average.  In district XIII. rental fees grew from 140 thousand to  172 thousand, which is a 23 percent growth, while in district XI a 15 percent growth was seen ( 150 thousand HUF) since last February. Rental fees in district VIII. increased by 14 percent, to 160 thousand HUF on average.

As for the Buda side is concerned, districts II a III. and XII. show a slight increase. The average rental fee last February in these districts amounted to 169-173 thousand HUF, while the average fell to 150 thousand  a year later. The most expensive apartments are on offer in district V. where a 50-70 square meter apartment can be rented at 200 thousand HUF, which is the same as last year.


According to  László Balogh at ingatlan.com there has been a very strong increase in  2015, but this has been influenced by an increase of the demand for investment properties representing a third of the transactions. However the February data show that rental price increase has came to a halt on the market. Primarily two factors can be seen as influencing the stagnation or the decrease in certain districts. One of them is a fall in demand: a 9 percent fall was seen compared to last January. It is hard to estimate which geographical areas are most affected, but there is a significant trend in prices. The other important factor is an increase in the offered properties, there were 29% more apartments on offer in February on a national level than a year ago.


For the moment it is hard to tell wether these price levels will stop here, but a definite stagnation of the offering prices can be felt on the Budapest market. “It is possible that during the next period of time the short term lease aparthotels may lose their importance and longer term rental properties will take the lead in this market. In case that happens, it can also help stabilize rental fees.” – said Balogh. He thinks that in the future the emphasis will shift towards newly built apartments, mainly as a result of the government’s new program boosting demands.

 

Read more at HVG.hu

 

 

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