Rental Prices Expected to Rise by Over 10% in 2024
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Rents in Budapest have increased by 19% in a year, fuelled mainly by record high inflation, Rentingo.com says in its latest analysis of the market. In December, landlords in the capital asked an average of HUF 239,000 for a rented apartment, while tenants faced a steadily shrinking supply. In 2024, the platform once again expects rental prices to increase significantly, but still somewhat slower than last year.
Meanwhile, the rental housing market is experiencing a steadily shrinking supply, on the one hand, because few new-build apartments have been handed over, and on the other hand, because the second-hand housing market is not attractive from an investment point of view, so the number of sales has fallen significantly. Tenants have therefore had fewer options to choose from, which has resulted in them trying to keep up with price rises. On an annual basis, their willingness to pay has also increased by 19%, with an average of HUF 223,000 for a rental apartment in December.
According to the rental search platform, several factors have had a significant impact on the rental market in Budapest over the past few years. The coronavirus outbreak caused a supply shock due to Airbnb apartments coming onto the market, while restrictions in certain sectors of the economy led to falling demand, and then the arrival of Ukrainian refugees due to the Russo-Ukrainian war upended the demand side.
Subsequently, as inflation jumped into double digits, government bond yields rose and the rental housing market gradually lost its elasticity. Landlords were therefore limited in their ability to implement rent increases depending on tenants' ability to pay.
In 2024, Rentingo.com expects that, unless the rental market is hit by an unexpected shock on the supply or demand side, rents will continue to rise in line with the trends. However, mainly due to single-digit inflation, rental price increases will be lower than last year and overall will not reach last year's level. In the event of a reasonable increase in real incomes, the annual increase in rents could be close to 19% on average, but if this does not happen, the average increase in rental prices in the capital is expected to be around 10%.
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