Briefly about the main thing
Hungary is a cozy and beautiful country with strong traditions, many interesting architectural and historical attractions, hospitable locals, excellent educational opportunities, excellent infrastructure for wellness, relatively affordable prices, rich gastronomic traditions and a dynamic real estate market that has actually recovered from the crisis today.
Hungary is well located in central Europe, in the Carpathian basin.It borders Slovakia, Ukraine, Romania, the countries of the former Yugoslavia and Austria. In the west, the foothills of the Alps approach the borders of the country, and the Carpathians border it from the north and east. Hungary has been a member of the European Union since 2004 and is part of the Schengen area. The country has excellent transport links with European countries at budget rates from such air carriers as Wizzair, Ryanair, easyJet, etc. It is comfortable to get here from Russia. To live and relax in Hungary means to be part of the European lifestyle with prices that are still lower than the average European. At the moment, the value of real estate in Hungary continues to grow steadily, while the supply of primary market objects is expanding, and demand for them is actively increasing.
In general, the Hungarian real estate market can be divided into two groups based on the main dynamics of demand. These are urban real estate in Budapest and resort housing, primarily in the Lake Balaton region and in the famous thermal resort of Heviz. If in Budapest, basically, real estate is purchased for permanent residence or subsequent rental, then in thermal resorts it is rest, treatment or preventive rehabilitation, as well as permanent residence.
Why Hungary?
- Mild climate and excellent ecology;
- Excellent opportunities for wellness in numerous thermal baths;
- Comfort and European lifestyle in Budapest;
- Hospitality of local residents and friendly attitude towards foreigners;
- High-quality higher education and diplomas of European standard, attracting students from Europe, Russia and post-Soviet countries;
- Fresh, ecological products of excellent quality, rich gastronomic traditions and many excellent restaurants and cafes;
- Good medical care;
- Relatively low prices for basic necessities and utilities.
- High level of security, limited number of migrants, predictable political climate.
Current situation on the Hungarian real estate market
Experts call 2015 the beginning of a new boom and rise in real estate prices in Budapest. This trend continued in 2016, and by the beginning of 2017, a relative equilibrium had come. Although prices are still rising, the rapid pace of increase has slowed down. In 2016, the average cost of residential real estate increased by 14.1%. The nominal price level exceeded the record of 2008, and in 2017 real prices reached the pre-crisis level. For 2.5 years, real estate prices in Budapest increased by 23%, in cities of regional significance by 8-12%, in rural areas the growth index barely exceeded 2%.
According to official statistics for 2016, the volume of real estate sales in the country increased by 14%. Sales growth was typical for every region of Hungary, and 150,000 sales contracts were concluded in 2016. This figure has reached the sales level of 2008. In comparison with the "peak" crisis year 2012, the number of transactions increased by 75%.
The demand for real estate in Hungary determines the supply. Focusing on the increased interest of buyers in high-quality housing, the state support programs for families with young children (Csok program) and the reduction in VAT on new buildings from 27% to 5% in 2016 caused rapid development in the construction sector: construction of new complexes began everywhere, the offer of real estate expanded everywhere in all regions of Hungary.
As for the resort regions in the area of Lakes Balaton and Heviz, the local real estate markets, of course, demonstrate a more "calm" dynamics, but they have confidently recovered after Budapest. During the crisis, prices here rather stagnated, there was no strong decline, and for three years they have been steadily growing by about 10% per year. There is a strong shortage of supply in the regions. And, despite the outflow of Russian buyers (until 2014 they occupied the most significant market share), good objects are sold out very quickly. Experts note that Heviz is characterized by the presence of objects built in the 1990s, and today their design is frankly outdated. Therefore, it is quite difficult to find a good house with a modern interior here. If such offers appear, they immediately find their buyer. New construction is actively underway in the lake areas, prices for objects are not budget-friendly.
Prices
For a long time, real estate prices in Hungary remained at an undeservedly low level for such a European country. Currently, they are increasingly approaching the level of European capitals, and, according to experts' forecasts, they will grow for about two more years before they reach their real level.
In 2016, only in two regions of Hungary - Nograd and Szomod - there was a decrease in real estate prices. This is due to the fact that prices in these areas initially reached their peak in 2015. Along with Budapest and in the regions of Feer, Komar-Esztergom, Tolna, Vash and Haidu-Bihar, prices increased by 14% compared to the average increase in the cost of housing in the country.
Among the regions of Hungary, Gyor-Moshon-Sopron, located next to Austria, is still the most expensive. The lowest prices are observed in Nograd and Borshod-Abauj-Zemplen. If we consider the average prices in the cities of regional significance, then Gyor is the most expensive city, followed by Debrecen, Szekesfehervar, Kecskemet, Veszprem and Sombanhey.
Budapest traditionally enjoys the greatest demand from both local and foreign buyers of housing in Hungary.The city consists of two parts - Buda and Pest. Pest is the business part of the city. Investments in residential and commercial real estate for subsequent rental bring more income here than, for example, in Buda, where real estate is bought primarily for their own living, and not for renting.
The cost of housing in the districts of Budapest
district 5 — the historical part of Budapest— tops the popularity rating. The average cost per square meter of residential real estate here is €3000-€3500, but it can reach €5000.
The 6th and 7th districts of Budapest — the blocks inside the grand boulevard ring and, in particular, Andrassy Avenue and the streets adjacent to it, are also in great demand among buyers. Real estate prices here are only slightly inferior to the prices of the 5th district.
8 district, which until some time was considered a non-prestigious area of Pest, has undergone tremendous development over the past decade, which has led to a systematic increase in prices. At the moment, prices for new buildings here range from €2000 to €2800.
The 9th district follows the 8th, the prices per square meter here are €2000-€2500.
Large-scale construction is currently underway in the 13th district, in 2018-2019 modern complexes on the banks of the Danube and in the central part of the district will be put into operation. Housing prices here range from €2000 to €3000.
district 14, located behind Heroes' Square and Central Park, even despite some distance from the center, has always remained in demand and attractive to investors. There are many modern, low-apartment, so-called "club houses", several residential complexes. In particular, a thermal residential complex with thermal water supply in its own bath. Real estate prices here range from €1800 to €2700 per square meter.
Real estate prices in Buda, especially in 2 and 12 districts, can be equated to the current prices of the historical center, although there is its own internal gradation of the popularity of the quarters. Blocks of old houses are replaced by fashionable areas with villas and mansions, and prices range from €1800 to €5000 per square metermetre.
The cost of real estate in the peripheral areas of Budapest, although with some delay, also show positive dynamics.
As for resort real estate, in Heviz prices for quality houses start from €130 000 for quality properties about 10 km from the lake. In order to buy a house on the shore of the lake, it is worth counting on the amount of €200 000. A villa with a swimming pool, high-quality finishes and three bedrooms will cost from €250 000.
Prices for apartments in Heviz start from €60 000 in a panel house without repair. Inexpensive objects quickly "fly away" from the market. Near the lake, prices start from €100,000 for small apartments of the secondary market, with an area of 40-50 sq. m. The primary real estate market is quite lively here. For the purchase of an apartment in a new residential complex in Kesthey, in the Balaton area, the future owner will spend approximately €2000 per square meter, while the house will be located at some distance from the lake.
Rent
The average rental yield in Hungary, taking into account many factors, ranges from 4 to 8%. How much the owner will receive from the lease depends on the location, condition and characteristics of the property, as well as on whether he is engaged in the delivery, management and advertising of the object independently or with the help of a management company.
In Heviz, tourist apartments are rented at a price of about €50 per day in the summer season. They are very popular in summer. In winter, hotels offer special offers, and tourists prefer to stay in them, and the apartments are empty.
Experts note that high-quality houses with lake views, a swimming pool, a good environment and three bedrooms are in huge demand for rent and, with their own management, bring income up to 8% per annum. The cost of a weekly rent of such a house in the season is €1000-1200. An interesting feature: houses with a view of the lake are more in demand than houses in the immediate vicinity of it.
The subtleties of buying real estate and taxation
In Hungary, there are no restrictions on the purchase of real estate by foreigners, while both an individual and a legal entity can purchase it. Russians only need a foreign passport to complete a purchase and sale transaction.
After buying a property, as in any country, you will need to pay a one-time fee for the purchase of property in the amount of 4%. There is no annual property tax in Hungary, with the exception of some parts of the diplomatic district of Budapest, the resort areas of the Buda side along the Danube. Also, the local authorities of some resort towns have the authority to use the annual tax on houses.
The current situation with a residence permit
The purchase of real estate does not give the right to obtain a residence permit in Hungary. As for the citizenship of the country, this is a completely different story — for this you need to have either Hungarian roots, or have a Hungarian permanent residence for so long in order to learn the language, pass a language exam, have a job and pay taxes, in a word, become almost Hungarian.
There are no investment programs providing foreigners with the opportunity to obtain a residence permit in Hungary today. But experts note that it is possible to obtain a residence permit and, as a rule, with proof of a sufficient amount of funds in the account, the legality of income and other requirements, obtaining a residence permit will not be a big problem. However, this is not guaranteed and is subject to individual consideration in each individual case.
Hungary is a member of the European Union and the Schengen area, therefore, a permit to stay in the country, which is granted on the basis of the purchase of real estate, allows unlimited entry and stay in Hungary, as well as free movement in the Schengen area. An annual Schengen visa is issued on the basis of non-resident ownership of Hungarian real estate.
Five expert tips for anyone thinking about buying a home in Hungary
- Before coming to Hungary, be sure to study the market well, look at the objects on the Internet in advance. And, most importantly, pre-form the main goal by answering yourself two questions: "Why do I need real estate in Hungary and what will I do with it in five years?».
- Before making a deal, live in the country for a while and visit different regions, feel if you really want to buy real estate here, or, say, you can just do with renting.
- Keep in mind that sellers of housing in Hungary do not make big discounts today, and there are practically no cheap objects left. The maximum you can count on is 5%. If your budget is low, then it will be either an apartment or a house in a remote location with less developed infrastructure than in Budapest. The difference in price is definitely the difference in the level of comfort and available services and amenities. The Hungarian real estate market today is a sellers' market. Approach the choice of housing as realistically as possible.
- Remember that Russian investors in Hungary are completely safe: the right to private property, according to European standards, is guaranteed by the legislation of the Hungarian state.
- When buying, do not forget that in Hungary inheritance between direct relatives is not subject to taxation. After the expiration of the five-year period of ownership of the object, the income received from the sale of real estate is also not taxed.
Portal HomesOverseas.ru thanks Irina Andryushkevich for her help in preparing the article (Westinvest) and Irina Lazar-Mishchenko (Balaton Home) for help in preparing the article.
photocredits: flickr / dmitry kruglyak
HomesOverseas.ru
1. "After buying a property, as in any country, you will have to pay a one-time fee for the acquisition of property in the amount of 4%." 4% of the value of the property worth up to 1 billion forints. From the amount exceeding 1 billion forints an additional duty of 2% is paid. The maximum amount of tax on one property is 200 million forints. It is unlikely that someone will buy real estate worth more than billion forints, but met with such a case in practice, so that it exists. When buying a new apartment from a builder costing up to 30 million forints, provided that the buyer does not confirm the sale of another apartment, a tax is paid from the amount exceeding 15 million forints, the amount up to 15 million forints is not taxed. Half of the tax (2%) is paid if the owner is under 35 years of age and becomes the owner for the first time, provided that the cost of the purchased apartment does not exceed 15 million forints. Now the market is difficult to find worthy objects for a price of up to 15 million forints, but the tax looks at the price in the contract (which can also be understated) and if it is not too different from the market, it takes it as the basis for calculating the tax.
2. "There is no annual tax on real estate in Hungary ...", it simply does not always have to be paid. On the example of Budapest and 13 districts: if an individual uses real estate for his own residence, then real estate is exempt from tax. If the property is owned by the jur. person, or in the ownership of a private person and real estate is leased or is a jur. the address of the organization, then a building tax is paid annually (in some areas it is called a communal tax) (2 x half a year). The price of this tax is set by the regional city halls every year. If the fact that fiz. persons do not declare this tax to the mayor's office and do not particularly follow this clearly, in the case of the jur. people are not so simple.