Hungarian property prices - especially in Budapest - have risen rapidly over the last few years. With the country’s entry into the European Union, many foreigners have made investments in property in Hungary.
The vast majority of property in Hungary is privately owned and there is a wide range of different types of freehold property available. For many years, the property market had been flourishing in Hungary and prices continued to rise.
Construction is also booming. There is particularly high demand for property in Budapest. Another area attracting a lot of interest is Balaton and the surrounding area (a popular holiday resort for both foreigners and Hungarians).
Over the last few years, apartments in traditional buildings from the early 1900s in Budapest have been appreciating at 20-35% per annum. Compared to other European cities properties in Budapest are a similar price.
Due to economic recession, however, prices came under severe pressure since 2009. It is yet to be seen if and when the Hungarian property will recover and whether it it will get back to its previous growth path.
Why has Hungary, and especially Budapest, been attracting foreign investment in construction and property?:
Some investments as well as rentals are being denominated wholly or partly in Euros. This means that exposure to currency fluctuation, for Euro-area investors, is non-existent or minimal.
Of course, the Hungarian property market is not risk-free (there is arguably no such thing as completely safe investment!) The economic slump is appreciable in Hungary too.
Also, investors in unlisted property companies should be aware that there is no open, liquid market for the trade of shares. This means that liquidating investments can be difficult and the value of shares in the market may be limited by the availability of willing buyers. Investors therefore bear the risk of having to accept a considerable markdown when selling their interest.