Price increases of Hungarian homes leading the pack in Europe
Now it’s official: home prices in Hungary have been skyrocketing lately, even by European standards. As shown by Eurostat data, the 11.6% surge in Q3 of 2016 compared to the same period of 2015 was the highest in the 29 countries examined.
Hungary is not the only place in Europe where the price tag of residential properties has been surging. Latvia and Iceland experienced upward trend of more than 10% as well. Buyers (if not sellers) were aided by lower prices in just two countries: Italy and Cyprus. The average EU-wide hike rate was 4.3%, according to analysis by OTP Ingatlanpont.
The rising trend in Hungary is more recent than in many other places when the time horizon is stretched back to 2010. For in the past seven years Northern European and Baltic countries have become the most expensive. In Estonia, for example, prices have gone up by 67% over that period. Hungary, with 20% price growth, ranks in the mid-range of the chart.
Needless-to-say, Hungarian homes were not affected uniformly by the above-mentioned trends; location plays a crucial role. Residential properties in the capital were worth one-fifth more within a year, whereas the value of those in small towns crept up by a mere 1%. In some villages, prices even dropped by 15%, Dávid Valkó, a leading analyst at OTP Ingatlanpont, says on the basis of tax authority records and OTP’s own Value Map.
Flats sold for 15% more in the first nine months of 2016 than the year before, while individual houses lost one-tenth of their value. The reason for the latter is rooted in the fact that most are located in countryside places that are not on investorsʼ radar. On the other hand, oversupply in places like Pest county (the county surrounding Budapest) is also driving down prices.
Nominal prices have surpassed record levels measured in 2008. In terms of real value, however, nationwide prices are still lagging behind those 2008 levels and, compared to wages, they more closely resemble the situation back in 1998-1999.
According to Valkó, this year should see prices reach a level of balance and, thanks to a higher supply of new developments, prices are expected to achieve single-digit growth. Regional differences could well further deepen, though.
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