Why is it a good investment to buy an apartment in Hungary?
Hungary is still considered as an attractive location for foreign investors. Buying a property may be the safest investment with an excellent return.
Based on the report of Eurostat, the purchase prices of properties in the EU grew 4%, in the euro zone with 3% from January to March 2016 in an annual comparison. The highest growth was however produced by Hungary in January and March 2016, the purchase prices increased 12.5%.
Since the turn on the Hungarian real estate market in 2014, investors could achieve a significant income, partly due to the increase in purchase prices of properties, secondly, because of the increase in rents. Based on the forecasts, the purchases on the real estate market in 2016 may reach the number of 180 000.
What stands in the background of the increase of purchase prices?
On the real estate market of Hungary those played a significant role, who bought an apartment in Hungary as an investment. The increased demand for small and medium sized downtown apartments raised the prices obviously.
Another reason is the growing interest for short-term rental of apartments. 3-4 years ago, in the Airbnb system of Budapest could be found only about 500 apartments, but last year there were already 5000 flats offered as Airbnb. The “Airbnb wave” is mainly in downtown Budapest (Districts VI and VII) very strong.
Lastly, the inflexibility of the offer to the growth rates has contributed. The developers have been waiting for the reduction of the tax, so they postponed their plans and new projects.
The reason why it is worth to invest in an apartment in Hungary
The real estate market of Hungary is expected to evolve in the year 2016. From 1 January 2016 the value added tax (VAT) – which is payable after the sale of housing – of 27% has been reduced to 5%, which will probably result the growth of the development projects of apartments. The reduction of VAT can set the construction projects implemented not only in Budapest but also in the major cities of Hungary in motion, where previously – because of the low prices – was not worth it to invest in the apartments.
In the case of such investments other benefits could also be expected, these include:
– A predictable monthly income, which results a lighter planning for the future;
– The amount that flows in a month can be invested in other investment products;
– Due to the trends in the property market can expect a further increase in the purchase prices, which may means a higher selling price in the future;
– In the last period, the rents increased parallel with the purchase prices: as well as the long-term, and the short-term lease may mean a stable and secure source of income.
The attainable yield is currently 6-8%.
In addition to the purchase prices and the rents also other aspects must be considered in case of investing, such as:
– The deck of the apartment;
– The security of the environment;
– Public transport;
– The internal construction of the apartment, etc.
One more advantage: secure legal basis
Another advantage of the purchase of real estate is that in the Hungarian legal system exist several legal solutions that contribute to the safety of this form of investment. One of them is the cadastral system existing since 1971, which functions by the principles of public credibility, publicity and the registration on the basis of documents. Another assurance is that the real estate purchase agreements require for their validity the countersignature of an attorney at law.
Are you an EU citizen who is interested in purchasing an apartment in Hungary? You can read our FAQ here.
Are you a non-EU citizen who is interested in purchasing an apartment in Hungary? You can read about the procedure here.
Should you have any questions in connection with the purchase of apartments in Hungary, feel free to contact us.