Compared to other cities, gross yields in Budapest, calculated from purchase prices and revenue from rent, are among the highest, which means the Hungarian capital is still a great destination for those investing in residential property. While the prices of apartments have skyrocketed in recent years in Hungary, residential property in Budapest is still quite inexpensive according to a joint study made by local developer Wing and research centre Eltinga.
Between Q1 2014 and Q1 2023 there was a 231% increase in residential property prices, which means that in the past 9 years, the annualised yield from the increase in value was over 14%. In Budapest, the rise in prices was even sharper than the national average. In the capital, prices per sqm shot up and in Q1 2023 residential property cost nearly 4 times as much as it did in early 2014 – this increase meant a 16.4% annualised yield for property owners.
However, investors should consider the rate of increase not just in HUF, but in other currencies. Prices of new apartments vary in Budapest, especially in central locations that are popular among investors. Here the prices are typically higher than the city average: for example in the priciest part, in District 5, a 40-sqm home costs about €258,000.
However, some locations are popular with investors and are easy to rent, yet they are less expensive than the average. One such area is District 13, where the price per sqm is lower than the Budapest average, and a typical, 40-sqm new apartment may cost less than €140,000. District 13 is a major location of the Budapest office market, which makes it even more popular and generates continuous, strong demand for properties. In addition, the district is undergoing transformation and the value of certain apartments is expected to increase at a higher rate than the market average.
Foreign investors should weigh their options before investing in residential property and explore the differences in prices and potential yields in attractive cities. For example, while the price of new residential properties in Tel Aviv in 2022 was almost €15,000 per sqm, it was only about €1700 in Bucharest. In Budapest, Zagreb and Warsaw, the price per sqm of new residential properties was below €3000 in 2022.
