Why Hungary, you ask?
Well, for starters, it's not just about goulash and thermal baths (although those are pretty awesome too). Hungary has been turning heads in the global investment game for some solid reasons.
1. Central Europe's Sweet Spot
Situated right in the heart of Central Europe, Hungary is like the cool kid at the international party. With its strategic location, skilled workforce, and operational costs that won't make your wallet cry, it's got that unique charm.
2. EU Membership Magic
Being part of the European Union is like having a golden ticket. It opens up a world of opportunities, and Hungary is proudly waving that ticket. EU perks, anyone?
3. Tax Treats and Residency Perks
Now, here's the juicy part. Hungary rolls out the red carpet for investors with tempting incentives. Think super low property rental taxes (we'll spill the deets later) and residency programs for our non-EU pals. It's basically an invitation to join the Hungarian adventure!
4. Budapest: Where Dreams Take Flight
Picture this – Budapest, the dynamic capital, is not just a city; it's a vibe. The startup scene is buzzing, tech companies are thriving, and the atmosphere is nothing short of electric. But wait, there's more! The historic city center is like a living postcard, boasting iconic attractions that make every day an adventure.
Choosing the right location
Whether you're aiming to attract renters or buyers, the key to success lies in choosing the ideal spot that resonates with your target market. And if Budapest is on your relocation radar, we've got some valuable insights just for you.
1. Life and Entertainment: Districts V, VI, and VII.
If you're a single resident or looking to cater to this lively demographic, set your sights on Districts 5, 6, and 7. These districts pulsate with life and entertainment, making them a magnet for overseas investors. District V, in particular, steals the spotlight with its iconic parliament, St. Stephen’s Basilica, and a plethora of eateries. District V saw a 4% price increase in 2024, reflecting its continued popularity. Dive deeper into the charm of District V with our earlier guide.
2. Central Revitalization: Districts VIII. and IX.
Investors, take note! Districts 8 and 9 offer central locations and have undergone significant revitalization in recent years. Properties here can be stellar investments, promising high returns. However, tread carefully – not all streets and neighborhoods within these districts are created equal. Some may be less developed and less desirable, so do your homework.
3. Family-Friendly Haven: Buda - Districts I, II, and III
For families seeking greener and more peaceful surroundings, Buda is the answer. Districts I, II, and III are top choices for international investors. District I boasts a historic charm with the Castle District, albeit with a unique twist – properties here cannot be owned outright, only leased.
Districts II and III, sprawling into Buda’s suburbs, offer a variety of options. Not only do they showcase stunning views and hiking opportunities, but they also appeal to parents due to the presence of renowned international schools. From the British International School (BISB) to the American International School of Budapest and the Gustave Eiffel French School of Budapest – these districts have education covered.
4. The Rising Stars - Districts XI, XIII, and XIV
These districts are gaining significant traction among both local and international buyers. Districts XIII, XIV, and XI are becoming the most sought-after locations, with experts predicting continued growth throughout 2025.
If you want a more detailed description about the districts read our Budapest District Guide.
Tailoring Your Property Hunt to Suit Your Needs
Once you've locked in the perfect location, it's time to turn your attention to the nitty-gritty details that will define your ideal property. Here are some key factors to consider as you embark on this exciting journey:
1. Purchase Price: Crunching the Numbers
Undoubtedly, the purchase price is a make-or-break factor. The average cost of a new apartment in Budapest hit HUF 79 million in 2024 (approximately €200,000), with experts forecasting a 7-10% price increase for used apartments and 9% for new apartments in 2025. Bear in mind that the average price of an apartment in the city center (District 5, 6) can vary greatly depending on factors like location, size, and condition. While a precise average is difficult to pinpoint, prices range from HUF 100 million and going up to HUF 259 million or higher.
Take a deep dive into your finances and establish a comfortable spending range. Remember, it's not just about the property's sticker price; closing costs, legal fees, and stamp duty are also part of the equation. Dive into the details of these costs in section 3 for a comprehensive understanding.
2. Layout and Size: Tailored for Your Purpose
Consider the purpose of your property. Investors are particularly drawn to smaller properties like 1-1.5 bedroom flats, attracted by their low maintenance costs, high liquidity, and strong rental demand from young professionals and international students flocking to Budapest. If you're targeting families, prioritize layouts with spacious, open-plan living areas, multiple bedrooms for privacy, and family-friendly kitchens. Storage is key, and a dedicated play area can sweeten the deal. For short-term rentals, focus on practicality and convenience, ensuring optimal space use and amenities that cater to a diverse audience.
3. Physical Features: Inspecting with Precision
When you've narrowed down your options, scrutinize the properties carefully. Look for any telltale signs of structural damage, like cracks in the walls or uneven floors.
4. Age of Property: Balancing Renovation Potential
Renovating can be a lucrative venture, but it requires more than just confidence. Assess the age of the property and weigh the potential returns against renovation costs. Some upgrades can significantly boost value, while others may not yield the expected returns.
Read our tips on renovating written by our in-house interior designer.
5. Maintenance Costs: Knowing What Lies Ahead
The ongoing costs of homeownership vary based on the property type, lot size, and age. Condos usually come with reasonable maintenance costs. Be aware, though, that opting for a house means taking on additional responsibilities like roof maintenance and regular gardening expenses.
Key Legal Considerations
1. Eligibility for Property Purchase
Both EU and non-EU citizens can purchase property in Hungary, excluding agricultural land. EU residents enjoy the same rights and obligations as Hungarian citizens, requiring no additional approvals.
IMPORTANT 2025 CHANGE: Non-EU citizens still need approval from Budapest's local municipality, but there are new proposed regulations that may give municipalities more power to impose restrictions or additional fees on foreign buyers. A draft law expected to take effect by July 1, 2025, could allow local governments to impose property taxes or purchase restrictions on foreign buyers.
2. Hungary Golden Visa Program
The Hungarian Golden Visa program (Guest Investor Residence permit) is currently delayed. The real estate investment option, which required a €500,000 purchase, was initially scheduled to launch on July 1, 2024, but was postponed to January 1, 2025. Additionally, the real estate fund investment option, while officially available, is not fully operational as no funds have yet received the required approval.
If you are interested in the original Hungarian Golden Visa Program read our previous blog here.
3. Cost Breakdown
Apart from the home's price, anticipate:
- Legal fees of 0.5–1.5% of the total purchase price
- Updated: Stamp duty of 2-4% (previously 4%)
- New builds: 27% VAT (usually included in price)
- If renting out the property: 15% income tax on annual rental income
- New for 2025: Potential municipal taxes for foreign buyers (varies by location)
4. Bank Loans
Securing a loan from a bank in Hungary is straightforward for those with a monthly salary. Local and international banks extend loans to foreigners, typically requiring a 30-40% down payment, with the rest financed by the bank. The process may take two to three months.
Important: Only foreigners with a residence permit in an EU country can apply for a mortgage in Hungary.
5. Residence Permits
Contrary to popular belief, owning property is not mandatory for obtaining a residence permit in Hungary. Renting a flat offers the same chance for a residence permit. While having property can be advantageous for permanent residence or citizenship applications, it's not a mandatory condition.
6. Property Purchase and Residence Permits
Buying property, regardless of the amount spent, doesn't guarantee an automatic residence permit. Approval doesn't ensure immediate permanent residence, and living in Hungary is a general requirement. Leaving the country for an extended period may result in permit revocation. A temporary residence permit is the first step for all applicants.
7. Selling
Holding on to your property makes sense: after owning the property for five years there will be no capital gains tax due on any profit you make.
If you’d like to sell before the 5 years is up, then here are the tax rates you’ll need to pay. The rate of the capital gains tax is 15%, and the base of the tax is the difference between the purchase price and the selling price (so not the full value of the property!). The year zero is considered the calendar year when your purchase was completed:
You can calculate the rates using the following table:
Documents you'll need to be able to sell your property:
Personal Information:
- ID or Passport: A valid form of identification is required.
- Birth Certificate: This may be needed if you don't have a valid ID or if your ID doesn't contain all necessary information.
- Residence Address: Proof of your current address.
- Mother's Maiden Name: This is a standard piece of personal information often required in Hungarian documents.
Property-Specific Documents:
- Land Register Extract: A copy of the land register showing ownership details and any encumbrances on the property.
- Title Deed: A document proving your ownership of the property.
- Energy Certificate: This is required by law for most properties.
- Mortgage or Loan Certificates: If the property is mortgaged, you'll need to provide documentation related to the loan.
- Power of Attorney (if applicable): If someone else is acting on your behalf in the sale, you'll need a power of attorney.
8. Investing in a short term rental Property
Keep in mind if you buy real estate in Budapest intended as an investment, short-term rentals, including those offered through platforms like Airbnb, are banned or restricted in the 6th district (Terézváros) starting January 1, 2026.
In District V of Budapest, new short-term rentals, including those on Airbnb, starting January 1, 2026 are banned. District V, has seen a move towards limiting the number of Airbnb listings. This means obtaining a new license might be difficult if you're not already operating a legal Airbnb in the area.
2025 Market Outlook & Investment Opportunities
1. Market Performance
Hungary's real estate market has been one of the EU's top performers, with property prices increasing by 230% since 2010.
2025 Forecast:
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15-20% increase in transaction volumes
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10%+ average price increases
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Budapest to maintain its position as Central Europe's most affordable capital
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Average gross rental yields of 5.39% in Budapest
Foreign Investment Surge
2025 Projection: Foreign investment in Hungarian real estate is expected to surpass HUF 1,000 billion, with continued strong interest from international buyers attracted by the new Golden Visa program.
Supply and Demand Dynamics
Current Situation:
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Nationwide apartment availability has dropped by 15% and houses by 10%
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New building permits in Budapest fell by 33.5% compared to the previous year
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Supply shortages are driving price increases across all segments
Here's how we make the magic happen
Local Expertise
Our team consists of local patriots who breathe Budapest. We know the ins and outs of each district, keeping our fingers on the pulse of evolving buyer preferences. We're the insiders who know what's hot, what's in demand, and what features captivate buyers.
Detailed Analysis
Leveraging our market knowledge and advanced tools, we conduct a meticulous analysis of local market conditions, trends, and potential growth areas. From supply and demand dynamics to economic development and property appreciation rates, we've got it covered.
Rental Insights
As a rental agency, we bring hands-on experience to the table. With average rental yields of 5.39% in Budapest and strong demand from the 46 million annual tourists visiting Hungary, we can precisely evaluate potential rental fees and conditions for each property.
Renovation Guidance
Having tackled numerous renovations ourselves, we guide you in identifying renovation criteria that align with location and market trends. Our in-house designer, Orsolya Laasz, can pinpoint creative opportunities that add significant value to your investment.
Negotiation Mastery
Once we spot the perfect property, we don our negotiation hats to secure the best price and terms. With tightening supply and increased demand, bargaining space is narrowing, making expert negotiation even more crucial.
Post-Purchase Support
Our commitment doesn’t end with the purchase. Whether you need assistance in finding tenants, property management, or insights on potential future renovations and market changes, we've got your back.
This guide reflects the latest regulations and market conditions as of 2025. Property laws and market conditions can change rapidly, so always consult with qualified legal and real estate professionals before making investment decisions.
