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Factors to Consider When Buying Real Estate in Budapest
Before purchasing real estate in Budapest, you should consider a number of factors. These include Pre-pandemic prices, Interest rates, New districts, and Taxes on real estate purchases in Budapest. A real estate expert can help you make the right decision for your situation. Read on to learn more about this city's real estate market.
Pre-pandemic prices of real estate in Budapest
Pre-pandemic prices of real estate were extremely high in Budapest. The city is one of the least levered real estate markets in the European Union, and the ongoing weakness of the HUF has made it an attractive entry point for foreign investors. In addition, historical real estate in Budapest offers tremendous absolute value. While long-term gross rental yields of four to five percent are not the most exciting investments, they are still very good for the historical value of the properties.
During the first quarter of 2018, prices in Hungary hit record highs. Prices in Pest, which comprises two-thirds of the capital city, rose by 22% year-over-year, while in the Northern Great Plain and the Southern Transdanubia regions, prices increased by 7.3% and 4.8%, respectively. Overall, Hungarian housing prices rose by a staggering 185% over the past year.
Interest rates in Budapest
In Hungary, interest rates for housing loans remain low. The average interest rate in June 2021 is only 4.49%. Property appreciation in Budapest is 7-8% per year, while in Vienna, it ranges from 2,5 to 35 percent. These gains are much higher than those achieved with fixed deposit investments.
Budapest is one of the least leveraged real estate markets in Europe. This makes it a very attractive investment option for foreigners. Rents are also very competitive with those of comparable European cities, while purchase prices are approximately 50% lower. Budapest has historically high absolute values, and the ongoing HUF weakness presents a good entry point for foreign investors. Gross rental yields of 4%-5% are not exciting, but they are stable over the long run due to the historical value of the real estate Budapest.
Budapest's interest rates are based on several factors, including inflation, economic growth, monetary policy, the bond market, and the overall condition of the housing market. During the period of observation, the average mortgage interest rate in Budapest fell from 4.2 percent to 3.47 percent, which was part of a trend across Europe.
New districts
Budapest is divided into 23 distinct districts. Some are comparatively newer than others, so there is a good chance of finding a great deal. The Fifth district, for example, was built in the early 1900s and is known as the Paris of the East. Its residential complexes are often affordable and do not have beautiful views. Some are more modern and pleasant to look at.
There are a number of neighborhoods in Budapest where you can purchase real estate. One of these is the district of Kobanya, located 15 minutes away by metro from the city center. The name Kobanya means "quarry" in Hungarian, and the area was historically used to extract limestone and clay. The area is currently surrounded by new luxury condominium developments.
Taxes on real estate purchases in Budapest
Buying property in Hungary is generally a fairly standard procedure, but the key to profiting from your real estate investment in Budapest is determining which fees and taxes apply. Foreign citizens are allowed to purchase property in Hungary, but they should be aware of different fees and tax rates. They should also consider the most profitable pricing construction for their property. To find out which fees and taxes apply, visit the Budapest Real Estate Fees and Taxes website.
In Hungary, a property owner must pay land and building taxes. These taxes are based on the value of the property and the floor space. In addition to this, the concerned authorities have the right to increase the tax amount if business activities occur on the property. A real estate due diligence report can help you determine what risks your property may be facing and how to minimize those risks.
Buying a property in Budapest as an investment
If you are planning to buy a property in Budapest as an investment, make sure to do your research before you make the purchase. First, you must know about the taxation requirements in Hungary. Generally, a foreigner needs to invest EUR180,000 or more before they can own a property in Budapest. Furthermore, you must hire a lawyer and use the right structure to avoid legal issues. You should also remember that if you plan to rent out the property, you'll need to pay property taxes.
If you plan on staying in Budapest for a long time, investing in real estate may be a good idea. After all, property prices have been on an upward trend for the past five years. Plus, Hungary's economy is expected to grow in 2020.
by emmastewart on 2022-10-18 06:58:06
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