Rental market turnaround might not come that soon in Hungary
The housing market started to slow down in Hungary at the end of the last year. However, financial experts are not expecting the Hungarian rental market to follow suit anytime soon. Purchasing a property is still an attractive investment option in Hungary, which could start to push prices down in the longer term.
As we have previously written, the housing market in Hungary started to slow down at the end of 2022. The number of transactions was at a decade-long low point, which affects the rental market as well. Pénzcentrum asked several experts to share their predictions on the rental market in Hungary.
What’s behind the stagnation?
“Demand in the current rental market is still very strong due to customers being priced out of the for-sale segment by more expensive credit facilities,”
said Benedikt Károly, Head of PR and Analysis at Duna House to Pénzcentrum. According to the expert, the high demand on the rental market stays until loan repayments and interest rates fall. Due to the high interest rates, people who would otherwise consider a purchase on the housing market, are pushed back to the rental market.
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Balogh László, Chief economic expert at ingatlan.com further elaborates on the situation. According to Mr. Balogh, the growing supply in the rental market is being absorbed by a stable demand. The stabilisation of the economic environment could lead to increased prices in the near future.
Rental prices might grow due to the end of the heating season. Mr. Balogh argues that due to the utility crisis – following Russia’s invasion of Ukraine, – landlords were afraid to increase rents. They were afraid that tenants might not have been able to pay them due to the increase in their utility bills.
However, the utility crisis has been avoided, and wages are increasing with the line of inflation. This could mean that landlords will be more courageous to ask for higher rental prices, as the return on their investments took a huge hit in recent times.
How long should people wait?
Mr. Benedikt advises that those who are not in a hurry to change rent should not change for the time being. The expert argues that people are holding onto their investments in the rental market. Their desire to see a return on their investments could increase supply. Tenants might also wait for people to make their moves in the housing market.
“As prices of properties for sale fall and the increasing possibility of bargaining makes property investment more attractive, the supply of properties for rent is expected to increase,” said Mr. Benedikt, who predicts this might happen during summertime at the earliest.
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Source: Pénzcentrum.hu