Even run-down apartments now come with sky-high prices in Budapest
The Budapest real estate market has experienced a significant surge in property prices, with even dilapidated apartments now commanding prices nearing HUF one million (EUR 2,500) per square meter. This trend reflects a broader escalation in housing costs across the city, affecting both new and existing properties.
Escalating prices for apartments that need renovation
In Budapest, the average price per square meter for apartments requiring renovation has approached HUF one million (EUR 2,500), Tőzsdefórum reports. This marks a substantial increase over the past year, indicating heightened demand even for properties needing significant investment. The rising prices in this segment underscore the overall upward trajectory of the city’s housing market.
Government initiatives influencing the market
The Hungarian government has introduced several measures aimed at stimulating the housing sector, which have contributed to the current market dynamics:
Housing stimulus from pensions
In October 2024, the government proposed allowing private pension savings to be used tax-free for housing purposes as a one-off measure in 2025, Reuters writes. This initiative aims to boost the economy ahead of the 2026 parliamentary election by facilitating access to funds for renovations, new mortgages, or existing mortgage repayments. Over a million private pension fund members, each with an average savings of HUF 2 million (EUR 5,030), could benefit from this policy, potentially injecting significant capital into the housing market.
Income tax exemptions and loan interest caps
In February 2025, Prime Minister Viktor Orbán announced an income tax exemption for mothers with two or three children and introduced a 5% cap on housing loan interest rates starting in April. These measures aim to revitalise Hungary’s inflation-stricken economy and make housing more affordable for families, thereby stimulating demand in the property market.
Impact of short-term rental regulations
The prevalence of short-term rentals has been a contentious issue in Budapest, with concerns about their impact on housing availability and affordability. Potential regulations on short-term rentals could alleviate some pressure on housing availability but might also impact investment returns. Prospective buyers and investors should navigate these developments carefully, considering both the opportunities and challenges presented by the evolving market landscape.
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