The median square meter price of a newly built home in the Hungarian capital is almost 22% more expensive than a year ago.Continue reading
Ingatlan.com has published a recent analysis of the national rental market, while Rentingo.com has published a new analysis of the rental market in the capital. Both show that rental prices have steeply increased and have reached pre-pandemic levels.
According to rentingo.com, rents in Budapest have not been this expensive for two years, with a 4.5 percent increase compared to March, and a 15.4 percent increase compared to the same period last year, meaning last month, landlords in the capital asked for an average of 165,000 forints per month for their rentals. The bottom in rental prices – the turning point in the market – was in March of last year, and since then rental growth has outpaced inflation.
The rise in rents across the country is partly due to a much tighter supply. A year ago, there were 20,000 apartments for rent nationwide, but this year there are just over 10,000 rentals to choose from, a 49 percent drop,”
said László Balogh, Chief Economist at ingatlan.com.
In addition, people fleeing the war are still entering the rental market in Budapest, significantly increasing the average level of demand from tenants, resulting in an unprecedented narrowing of the gap between supply and demand rents. Since then, however, the market has corrected, with prices on both the supply and demand sides returning to the trend seen since the beginning of the year, and the floodgates opened again. In April, tenants were looking for an average rent of HUF 152,000 (EUR 400) in Budapest, 1.6 percent less than in March, but still well above the HUF 147,000 (EUR 388) in February.
The average income of tenants has risen significantly over the past two years, and as a result, the rent is higher than two years ago. Rent levels in Budapest are expected to continue to rise steadily for the rest of the year.
According to the analysts of ingatlan.com, renters have already snapped up the cheapest offers within the recent period, and the increase in price has been significant, with average rents in the capital rising by 35% in a year, and in most of the county capitals, the increase was between 8-33%.
Without exaggeration, we are seeing a sharp price increase in the rental market. In Budapest, the average rent was 170,000 forints (almost 450 forints) in April, but a month later it was 175,000 forints (460 euros), a 3 percent increase,”
said László Balogh, adding that “At the beginning of the housing boom, in spring 2015, the yield on residential property in Budapest was 8.77 percent. In the county capitals, it exceeded 9 percent. The gross yield on rental income is now 4.75 percent in the capital and 5.22 percent on average in the county capitals, roughly half of what it was seven years ago.”
Although the rise in interest rates leads more and more people to postpone their home purchases and rent during the transition period, this may not be a good choice. Balogh advises that it is worth making a move rather than renting if you are creditworthy even in the current environment.
With seemingly higher lending rates, more expensive home loans can now be replaced by cheaper schemes when lower interest rates return. But if they don’t return, the ever-higher cost of renting will make it even harder to raise the down payment and get started on the road to homeownership.”
Featured image: illustration via Pixabay