Hello all!
I have been researching the Budapest property market some, and I see some here also do the same. So it might be worth while starting a discussion about this market, who might be interesting if we look a few years down.
First of all. Im not at all after hitting the bottom. That is impossible. My intention is for buying and holding.
The most important factor as I can see now is that its buyers market. Even in the traditional solid areas of Buda and Pest districts. Locals seem to stay out of the market, and same with foreigners who got burned the "traditional way" with paying too much. It is a huge amount of properties for sale and rent. At least the latter is a bit scary as the locals dont rent that much in Budapest as far as I can see. Rental prices will most likely continue to fall.
Short term you are therefor most likely going to burn some cash no matter? At least you will not get more than 5-6 % yield as the apartment will be empty a lot. I can see that 1 in 4 will be empty at all times.
But no matter..... Here are some of my views of the future:
1. Interest rates are high - Lower interest rates will help bring the buyers back into the market, and boost business side in Budapest. With the government finances stabilizing, inflation get a bit lower, and credit being available again this will happen. My guess is within 1-3 years.
2. Unemployment go down - This will be a fuel for the market, as many locals stay out due to no work or they are afraid of their jobs. This will take a lot of the rental market. I expect this to happen within 1-3 years also.
3. Forint is undervalued. It has fallen a lot against the euro, and I think it is a bit excessive. At least since the interest rate is so high, and the export/import balance is quite healthy.
4. Tourism - Budapest is a jewel in central europe and will continue to be a well visited town
5. Urbanization - Is below 70 % and will be higher. They and Austria are a bit slow in that regard, but with the economy people will move to the city.
6. Falling birth rate - Negative, but that will most likely affect the countryside more than the city.
7. Property tax - At present only few of the districts have it. With district 5 for companies the most scary one. I do not think that others will introduce it, with exception of district 6. Other views?
My conclusion is to buy at least, but you have time to spend finding the right apartments. So what to buy? It is mainly 3 groups other than the locals that rent. Students, businesspeople and tourists.
1. Students - Will look for apartments with low cost, close to metro line and practical. Most likely rent 20 - 30 square meter? Or do they prefer to share 2 bedroom? District 6,7,8,9 and 13 are the most likely areas?
Very low prices for these apartments.
2. Businesspeople - Mostly high end luxury apartments with garage. This is a slightly broken market, and will continue to fall due to too many apartments out there. Prices will most likely fall short term.
3. Tourist - Very good prices but a lot on the market at the moment. Prices will go further down short term.
At present I believe the best market now is students, followed by tourists. So in my head the optimal solution would be to rent out to students 10 months a year, and then tourists for 2 months. Even if this is very hard to do it might be possible in Budapest?
So what district?
I think district 7,8,9 and 13 are the most interesting at the moment. Any other views on it?
I have been researching the Budapest property market some, and I see some here also do the same. So it might be worth while starting a discussion about this market, who might be interesting if we look a few years down.
First of all. Im not at all after hitting the bottom. That is impossible. My intention is for buying and holding.
The most important factor as I can see now is that its buyers market. Even in the traditional solid areas of Buda and Pest districts. Locals seem to stay out of the market, and same with foreigners who got burned the "traditional way" with paying too much. It is a huge amount of properties for sale and rent. At least the latter is a bit scary as the locals dont rent that much in Budapest as far as I can see. Rental prices will most likely continue to fall.
Short term you are therefor most likely going to burn some cash no matter? At least you will not get more than 5-6 % yield as the apartment will be empty a lot. I can see that 1 in 4 will be empty at all times.
But no matter..... Here are some of my views of the future:
1. Interest rates are high - Lower interest rates will help bring the buyers back into the market, and boost business side in Budapest. With the government finances stabilizing, inflation get a bit lower, and credit being available again this will happen. My guess is within 1-3 years.
2. Unemployment go down - This will be a fuel for the market, as many locals stay out due to no work or they are afraid of their jobs. This will take a lot of the rental market. I expect this to happen within 1-3 years also.
3. Forint is undervalued. It has fallen a lot against the euro, and I think it is a bit excessive. At least since the interest rate is so high, and the export/import balance is quite healthy.
4. Tourism - Budapest is a jewel in central europe and will continue to be a well visited town
5. Urbanization - Is below 70 % and will be higher. They and Austria are a bit slow in that regard, but with the economy people will move to the city.
6. Falling birth rate - Negative, but that will most likely affect the countryside more than the city.
7. Property tax - At present only few of the districts have it. With district 5 for companies the most scary one. I do not think that others will introduce it, with exception of district 6. Other views?
My conclusion is to buy at least, but you have time to spend finding the right apartments. So what to buy? It is mainly 3 groups other than the locals that rent. Students, businesspeople and tourists.
1. Students - Will look for apartments with low cost, close to metro line and practical. Most likely rent 20 - 30 square meter? Or do they prefer to share 2 bedroom? District 6,7,8,9 and 13 are the most likely areas?
Very low prices for these apartments.
2. Businesspeople - Mostly high end luxury apartments with garage. This is a slightly broken market, and will continue to fall due to too many apartments out there. Prices will most likely fall short term.
3. Tourist - Very good prices but a lot on the market at the moment. Prices will go further down short term.
At present I believe the best market now is students, followed by tourists. So in my head the optimal solution would be to rent out to students 10 months a year, and then tourists for 2 months. Even if this is very hard to do it might be possible in Budapest?
So what district?
I think district 7,8,9 and 13 are the most interesting at the moment. Any other views on it?