Budapest is East-Central Europe’s largest city as well as the European Union’s seventh largest. Budapest was formerly two separate cities; Buda and Pest. Buda is the older of the two and is located on the west side of the Danube River while Pest is on the eastside.
Buda is famous and loved for its historic feel and architecture. It has many cobbled streets and color-washed houses. Buyers of real estate in Buda are generally those with long-term interests. Pest is larger, full of hustle and bustle, and is more commercial than Buda. It has many classy restaurants, luxury hotels, designer boutiques, and so much more.
Although properties in Buda are typically more expensive than properties in Pest; real estate values in Pest experience greater capital appreciation. The trend for 2013 is the purchase of newly constructed residences over older ones. This has resulted in a 7.4% increase in the price of new dwellings.
In Pest, an investor can expect prices for apartment dwellings to range in price from €82 240 (USD$107 800) for 40 m2 (430 square feet) units, to €613 395 (USD$804 038) for 215 m2 (2314 square feet) units.
The Hungarian economy is scheduled to receive a financial boost in mid 2013. Good news for the economy means good news for real estate investments. For the months of June, July, and August; the National Bank of Hungary will be introducing the “Funding for Growth Scheme.” Here are more details of this financial boost:
- Businesses will receive more loans
- Companies will experience a reduction in foreign currency based loans
- The National Bank of Hungary will issue to commercial banks a maximum of HUF250 billion (USD$1.1 billion) in interest-free loans
- This HUF250 billion (USD$1.1 billion) loan will then be appropriated to businesses to convert their foreign currency based loans to forints
- The National Bank of Hungary will dip into its foreign currency reserves to withdraw €3 billion (USD$3.82 billion) to assist local banks in cutting their short-term currency debts
This influx of new funds is great news for the real estate market. It is expected that Budapest will see an increase in the number of new residential building permits.
For international investors considering purchasing a residence in Budapest; here are some useful information and steps to follow to make the process easier and stress-free:
- Negotiate the price until your offer is accepted.
- Obtain a lawyer to draft the purchase and sale agreement. The lawyer acts on the behalf of both the buyer and seller even though he/she is brought in by the buyer.
- Real estate agents collect from the seller and not the buyer.
- Have your deposit ready (about 10% of the purchase price).
- The lawyer will submit the agreement to the necessary office for the permit.
- When the permit is received; the lawyer will submit it to the Land Registration Office.
- Pay the necessary fees and taxes.
- If your intention is to sell the property within fifteen years; be prepared to pay withholding taxes.