4 November, 2019

Fall in Budapest

What was before? The egg or the hen? Do you have this saying in your culture?

Autumn finally arrived in Budapest. A week ago we still had 25 degree like in the summer. I am not saying I did not like it. Sunshine is great. However getting close to 1st November, All Saints’s Day and the following All Souls’ Day I started to miss the fall. I am used to foggy and cool, many times chilly and snowy days when visiting the cemeteries. I need a bit of cold when writing letter to Santa Claus to Finland with the children to make sure to have an answer before the end of the year.

Finally it cooled down.

Just like the property market. Despite optimistic articles of the past years, I can read everywhere titles like “The increase of apartment prices can finally stop in Budapest”, “Enormous decrease in the number of apartments sold in Budapest”, “Price increases got to an end in Budapest” etc.

What numbers and reasons these articles mention and what can I, a real estate agent experience?

The news say that the implementation of the super government bond offering 4,95% secured annual income in a 5 year term decreased a lot the interest of investors for real estate purchases. In the first half of 2019, the number of sales of used apartments dropped by 46% compared to the same period of 2018. The prices stagnate since Q2 of this year and many sellers need to drop prices to find a buyer. 10-12% negotiation in price is not unusual anymore against the previous 5% discounts.

What I can see is, that prices increased heavily from last year till the beginning of this year. According to statistics of the Hungarian National Bank, the increase was 22,9%. Price increase in 2017 was 15,6% according to the HNB. However it seems that against the optimism of the sellers to put their apartments on such a high price on the market, the number of buyers dropped significantly in the past half year. Sellers hoped for a good price increase due to the implementation of the government loans for couples who expecting babies which happened in July this year. But the expected increased demand did not take place. On the other hand due to the large price increase, the demand fall back significantly.

Those sellers who want to sell their apartments, they need to understand that the realistic sales prices are below the average level of advertisement prices of the certain area. The average time of a sale also increased from 1-2 months to 2-3 months if the apartment is correctly priced.

When reading so many articles about the stop of the price increases and a potential correction of the prices, I tend to think if the news report about the property market or influence it.

What was before? The egg or the hen?