House prices soar by 5% in Budapest

According to new data gathered by the Budapest Housing Market Report, the number of new apartments for sale in Budapest in May was 2.5 times more than in February. Increasing supply brought forward an increase in prices; during the period in question the price of apartments for sale increased by 1 million HUF on average, approaching 40 million on average. Considering prices per square meter there is an even greater increase: the price per square per new apartments for sale has increased by 5%.

 

Along with the increase in the number of apartments for sale it can be observed that apartments that have been on the market for a longer period are being sold more quickly. Therefore, in most projects that have apartments for sale ownership changes continuously.

 

During the last few months several developers announced projects with many apartments that will be available for moving in in 2017-2018. However, the increase in the number of building permits so far lags behind that of apartments supplied, probably because some developers started sales “off the drawing board”, before obtaining the permits, taking advantage of the currently large demand.

As a consequence of the recent, more favourable housing market environment, characterised by lower VAT and the introduction of CSOK (governmental subsidy for purchasing real estate given to families with children), many developers decided to launch new projects. This reaction is seen both in the increase in the number of apartments for sale and the timing of deliveries. Projects for which only concepts exist at present will need time for planning and implementation. 

 

In 2016 the number of new apartments delivered is expected to be limited. These developments had to be started before the announcement of the above mentioned favourable policies. Projects launched due to these changes in the market may be given occupancy permits with a delay, which is reflected in the fact that these apartments will enter the market in the second half of 2017. In the third and fourth quarter of next year more than 1,400 apartments may be finished.

As pointed out earlier, due to the heightened mood that prevails, developers even put those projects on the market that are in the design phase. The announcement of more than 700 apartments to be finished in the first three quarters of 2018 is related to this. The number of projects planned to be delivered two years from now will surely increase as a consequence of new investments. Another phenomenon that reflects the heightened state of the market is that there are about 200 apartments in Budapest on the market for which the delivery date is not yet known, that is, these are offered for sale at a very early stage.