This is the question I have been asked so many times recently by clients, by friends and even by myself. I screen the market every single day. I see what is for sale and I see also what is sold. This later data is very important as the majority of ad prices became very irrational recently. I hear and read the local news. I speak to other agents, friends from the banking sector or to my accountant. And they all say different things. So what is going on?

Since 2013, the bottom of the crisis prices doubled in 5 years and they are still increasing. I sold my own home – a 61 sqm 1 bedroom flat just off Andrássy avenue – in 2014 for 22 million HUF to an Italian investor. I sold it again in 2018 on behalf of the Italian owner to the parents of a Hungarian young man for 40 million HUF. Yes, it was a little bit painful but I could not turn back the wheel of time.

How could such a big price increase happen within such a short period? There are several reasons. People having lost confidence in stock markets and banks can invest their savings only into real estate. The Hungarian National Bank keeps the interest level very low which enables commercial banks to offer mortgage loans at a low rate. The government is providing non-refundable support for families to purchase or renovate their apartment. A family with 3 children or a couple who undertakes to have 3 children in the next 10 years receives 10 million HUF help for their purchase. Developers of new buildings can sell their apartments with only 5% VAT instead of the general 27%. Massive developments are going on. The average net salary also increased quite well from 122,000 HUF to 215,000 HUF from 2008 to 2018.

The question is by many of us, where is the end of this price increase.

The VAT for new developments which receive the building permit after 1st November, 2018 will be again 27%. Less new flats will be built. Their prices will be even higher though because of the high VAT. This will drag the prices of the used apartments as well. Or they will remain unsold and sellers who need to sell will lower their price? In Q4 2018, there were 7,000 unsold new homes in Budapest.

Net salary increase is 8-10% on average, but property prices increased over 10% annually, will there be a correction or prices will really reach once the level of Bratislava, Prague or Vienna?

Specialists say that the Hungarian National Bank has to increase the base rate soon, how will it effect the interest rate of mortgage loans and the decision of investors? Due to the high prices, the rental yields already dropped at many places down to 4% which will make moody some investors.

More clever people than me say that taking into account all the above, the price increase will not stop in the next 2-3 years but its scale will be smaller. Or not.

If you ask me, in case you were thinking about selling within the next 2 years then sell it now. A sparrow today is better than a bustard tomorrow, say the Hungarian. A live dog is better than a dead lion, say the British.