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ASK ABOUT BUDAPEST
Open talk about Budapest property market where honest point of views
are missing due to vampire players’ power and interest.
How
is the Budapest Residential Property Market in 2012? YOU MUST KNOW THAT NO MORTGAGE(REMORTGAGE AND EQUITY RELEASE ) AVAILABE IN HUNGARY BY FOREIGNERS!
First we need to
look back and see the background of the real property market in
Budapest. The key points are, as follows:
1. Between
2000 and 2004: Budapest property market was targeted by investors
who expected property price boom when Hungary was joint the EU in
May 2004.
2.
Unrealistic price
increase was based on miscommunication from estate agents and
mismanagement of investors that caused promising capital growth by
2005.
3.
However,
lucrative Budapest investment market were divided by 2 markets:
-
Investor
market where prices increased considerably and the higher
price the higher capital appreciation model applicable. But it was
artificial and unreal capital growth that was going to be stopped.
Foreign investors (from Ireland and the UK, for instance)
invested through estate agents who mismanaged investors with false
market information and miscommunication. Overpriced and
over-valuated properties (sometimes properties with unable to resell
conditions sold to naive investor who were impressed by downtown of
Budapest) purchased by foreigners who were eagerly waiting for nice
return and capital growth from Budapest property investments.
-
Local
market where folks purchased apartments at significantly
lower prices (10%-30%) and they did not have high expectations with
capital growth and return. Local market was more sensitive with
unrealistic prices and dodgy properties. Locals purchased
apartments with lower price in all buildings where foreigners were
also interested in. New developments (off-plan) under local
and foreign (Irish and British agencies) real estate agents’
co-operation marketed in several property shows (in Ireland and the
UK) that helped developers using unfair pricing against foreigners.
As a matter of fact 30%-90% (extreme figure in a new development
where 70% Irish, 20% other nationalities and 10% Hungarian only)
foreign ownerships in Budapest new developments happened because
developers were interested in selling apartments with extra profit
to foreigners.
-
Between 2006 and
2008 local market and investor market were emerged and overseas
property investments (Buy-to-Let Schemes) became a nightmare for
those who were ripped off in first decade of Budapest property
investment market. NO CAPITAL APPRECIATION SINCE 2005 IN
BUDAPEST BECAUSE LOCAL MARKET PRICED PROPERTIES IN ACCORDANCE WITH
INCOME POTENTIALS IN HUNGARY. Local market priced
foreign-owned properties as well which prices usually are not based
on value
That is why
2010 was the first year when property prices
were communicated in public(both in Hungarian and
English): reached the level of local market in
2005. Global changes
in financial markets (credit crunch) made reselling potentials more
difficult than ever expected. Because prices like 2005 but buying
activities are not at the same level due to lack of financing and
trust in Hungary, of course. Dodgy investment strategies and
partners (greedy agencies British, Irish,
Izreali, Hungarian, Spanish) destroyed Hungarian property market
reputation which made Budapest property matters tough.
Although stand still market with limited resale potential and loss
minimisation aspect is very quite at the minute, it shows us some
interesting opportunities.
Burned and
desperate investors under financial and emotional pressure are
leaving Budapest but market must go on. Everything has changed
dramatically but the new property world in Budapest needs to be
understood to show us investment opportunities. With
respect, it is not a good time to sell, definitely, but it is not a
good time to buy either unless you know what to buy, where to you
and what price in Budapest.
What are Budapest resell potentials in 2012? Will 2012 hurt
resale potentials in Budapest?
Do you intend to
sell Budapest property in 2012?
Please mind that
Budapest properties with BELOW MARKET VALUE (at fire sale prices)
are most likely to be sold in a certain period of time but
realistic market value is almost impossible to be achieved unless
the property is strongly demanded on the local market. Resale
potential of Budapest apartments may vary in each district but
marketed apartments to local demand are ready to be sold only.
Demanded apartments are available in all districts of Budapest by
locals who are looking for apartments in all price range. Predator
investors, of course, are also watching the market to find desperate
owners who are willing to make a deal below market value as low as
possible in Budapest.
To set resale
potential for a particular Budapest apartment, it is to be evaluated
as complex as possible. Average development price (new build) or
average district price (classic home) can mislead you and they are
not recommended to be used at all. Purchasing price, for instance,
could be a good starting point unless you paid over the odds.
Professional property valuation with selling strategy,
eventually, is the key to successful resale in a reasonable
timeframe. Overpriced / Over-valuated Budapest properties might be
unsold for months/years that would be a disappointment to whom is
concerned with. Unwished Budapest properties might be unable to be sold in 2012 but sellers with good apartmetn are able to make a deal if they accepted selling price in HUF.Weak HUF is good for buyers from abroud but a painfull fact that is to be considered when an invester purchased the apartment in EUR, for instance, and wants to sell in EUR. The difference between buying and selling price is the first obvious answer whether to sell or not.
Solid
profit on property sale is still available in Budapest if
property with good resale value was purchased before 2005 at local
price level. Loss minimisation on property investment will be the
goal, otherwise.
Selling Budapest
properties in 2012 is strongly recommended only who is desperate and
stretched by serious financial pressure. Who is able to
finance Budapest property investment in 2012, those investors need
to await and keep cashflow from rental well-maintained.
How
is the Budapest Rental Market in 2012?
In
general, achievable rent has been decreasing and rental potentials
restricted. It is not rare when apartments are standing
empty for months even if rent is continuously decreasing month by
month. Average vacancy period is 3 months approx. but we also have
empty apartments for over 6 months.
Keep the apartment rented with making tenant happy is a
critical point in the current market environment. To introduce a
tenant, more time and extra efforts (more flexibility with
organising tours to tenants in the evening/in the morning and at the
weekend/holiday) with price negotiation needed.
Thanks to
oversupply with furnished apartments in inner districts (5,6,7,8,9),
tenants intend to move as close as possible to the heart of City
just nearby a metro station. The more well-located property the more
chance of having a tenant in a specific time.
Well located does not
mean only that you have an apartment in those districts but street,
street number (building condition), floor, view are in focus.
Decrease in
rental prices had led to more interest for one bedroom apartments
compared to studio
or 2 bedroom
ones. Studio apartment owners are suffering
as
long vacancy period and low rent level
as 2 bedroom ones if rented.
New build one
bedroom apartments’ rent in district 6 and 7 has also gone down,
they are good alternative rental option compared to classical one
bedroom properties, accordingly. Also, huge 1 bedroom (over 70 sq.
m) and 2 bedroom (over 90 sq. m) apartments are less desired as well
as 3 bedroom by tenants. Tenants are looking for cost
effective (reasonable rent with as low utilities as possible)
liveable one bedroom apartments in a tidy and well-organised
building.
Tenants are
spoiled with massive oversupply and low rent for nicely furnished
apartments because number of tenants (tenants from abroad, indeed)
in Budapest is considerably lower like a couple of years earlier.
When
is Euro going to be introduced in Hungary? How are the Hungarian
Economy Prospects?
Euro
introduction is expected to be done within a
decade (around 2020) but
uncertainty in Hungarian economy performance might have impact on
the action. We do not have a crystal ball to see what
happens next but changes will be taken place through slow social and
economic procedure in long time aspect. Disappointed society with
anti-globalism attitude and black economy with political and
corporate corruption as well as low income (Average monthly net
salary in Hungary = 500 Euro) make the Hungarian Economy
prospects questionable in short term. 2011 was the year when Hungarian GDP reached 1.7% but rececssion warning for 2012 was already expected at the and of last year. All in all, 2012 will not bring any positive outlook of Hungary, because stagnated economy is the best scenario for the whole year while economic meltdown and political upheaval in the country . 2012 is the first year when we can see perspectives and new economy's direction needs to be replaned. The government is under pressure from both poor economy performance and disappointed locals as well as IMF and the EU. Like it or not, we live in interesting times and 2012 will be just as eventful.
If you had further specified questions with Hungarian economy and Budapest residential property market, we are pleased to place questions with answers in public.
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