Facts and figures of the past months which can answer your questions about the current market trends.
We are undergoing interesting times. Quarantine. Home-office. New restrictions. Closure of businesses. Stop of tourism. How all these are affecting the real estate market and the real estate prices? Questions which all property owners and potential property buyers would like to know.
The lack of tourism affected immediately the RENTAL PRICES which DROPPED in the central districts by at least 15-20%. In these districts – V, VI, VII – a major number of airbnb flats got onto the market for long-term rentals which pushed down the previous price level. A large number of flats are still vacant as not only tourists left the country, but also lots of foreign students chose to move back to their home country. The drop of rental prices is smaller, around 10%, in outer districts which was always a market for long-term tenants.
The STAGNATION of the real estate market started not by the Corona virus, but already in the middle of 2019. The number of constructions dropped significantly, in case of family houses the number of new building permits dropped by 25% while the number of permits for condominiums decreased by 38%.
While looking at the advertisement prices of apartments significant price decreases can not be felt, but the NEGOTIATION ROOM became larger. Sellers used to negotiate on the asking price between 1-5% which increased now to 10%, in some cases 15%. It is also true that the gap between the buyers’ and sellers’ price expectations is getting larger and larger. Buyers do not intend to pay anymore the price they would have paid for an apartment before the virus. On the other hand most sellers stick to their asking price and not open to large price drops for the moment.
Due to the uncertain market environment and unpredectible further consequences of the virus, most INVESTORS are hold off from a property purchase and wait for better times.
What we have seen following the economic crisis in 2008 is that the real estate market reacts SLOWLY to the changing economic climate. In Budapest, it took about a year when we could feel its negative effects on the apartment prices.
The positive news is that there are PLENTY OF BUYERS on the market. The number of researches on various portals increased back to the same level as prior to the virus and exceeded the level of June 2019. It is now up to the sellers if they can adapt to the new market situation.