With property buyers pushing towards the car boom and the agglomeration of homes, garages have appreciated in value, and anyone who bought one a few years ago, even as an investment, could do well now, the Hungarian Forbes reports.
Ingatlan.com‘s advertising database shows that anyone who invested in a garage five years ago has done rather well since both garages and their rental prices have risen significantly in recent years. According to the website’s analysis, despite the regulations, not all the apartments in the blocks of flats built in recent years have been fitted with parking spaces. A significant number of investors have taken advantage of this opportunity and have paid the municipalities for this obligation.
According to Forbes, there are two main trends behind the price increases:
- The number of cars in Hungary has increased significantly in recent years and the supply of parking spaces has become increasingly scarce, which has pushed up garage prices.
- The demand for residential property in Budapest and in the outskirts of the big cities has increased due to the epidemic, and commuters’ need for parking is steadily rising.
More cars are already in need of more space, especially in the larger cities, due to the expansion of the population moving out of the capital, but the housing market effect linked to the epidemic has also been felt in the garage market. The phenomenon is therefore not unique to Budapest, but the capital is where the price increases are most visible. The outflow from larger cities is also reflected in house prices.
The average price of garages for sale in the capital in February this year was HUF 5.3 million (EUR 15,000). This is 9 percent higher than a year earlier. Compared to February 2019 and 2017, however, the price increase is more impressive, at 30 and 121 percent respectively.
Within the capital, there are several districts where only a few garages are on offer, such as the I or XII districts. In the V district, on the other hand, there has not been a single garage for sale in the last year and a half.
The average monthly rent for garages in the capital was 25,000 forints, which represents an annual increase of 14 percent, and a 25 percent increase compared to five years ago. The short supply of garages is also illustrated by the fact that there are some garages for rent in the 5th district, but the average monthly fee is 54,000 forints. For this price, you can rent a room for a month in Budapest.
Ingatlan.com‘s analysis based on 50,000 advertisements also reveals that among the county capitals with the largest supply, i.e. dozens of garages for sale, garage prices have increased in the past five years by 66 percent to HUF 3.7 million in Debrecen, by 200 percent to HUF 4.5 million in Győr, and by 174 percent to HUF 6.3 million in Szeged, above the average price in Budapest.
According to László Balogh, senior expert at Ingatlan.com, the current trends can only intensify in the future, which could result in further increases in garage and rental prices. In addition, the level of returns on garage rentals is already exceeding that of apartments, which could trigger a further investment rush for parking spaces. This, in turn, could further shorten supply and raise the price of garages for sale.
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