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The price per square meter of newly built apartments in Budapest has doubled since 2013, which means that the capital has recorded the region’s fastest price increase along with Prague, according to the analysis of the Big Four company KPMG.
In the 8 years covered by KPMG’s research, Hungarian prices have exceeded those in Warsaw, Bratislava and Zagreb, but lag behind those in Vienna, Berlin and Prague.
Although the price spike in Budapest eased at the end of 2019, partly because of the epidemic and partly because of the temporary reinstatement of VAT on new housing (from 5% to 27%), market players can expect a further recovery in 2021 as a whole, driven by the return of tax incentives and the economic recovery that replaced the recession, the company notes.
While this is good news for homeowners in the capital, it is not necessarily good news for those looking to buy their first home. The researchers therefore also looked at the evolution of house prices relative to net income. The answer to this question is the ratio of house price index to net income, which shows the percentage increase in house prices relative to net income per capita.
This ratio for Hungary is 1.7, which means, using a simplified example, that while wages increased by 32% over the period, the price per square meter increased by 124%, c That is, the gap between income and house prices has widened considerably. Only Germany recorded a larger change (1.78 times). The ratio increased exponentially between 2015 and 2019, coinciding with the first domestic era of preferential housing tax, after which the opening of the gap slowed down.
If the question arises as to what percentage of an individual’s annual income can buy a square meter of new housing, the Hungarian situation does not seem favorable, with the ratio of 35% in Budapest and Vienna only being beaten. by Prague, where 58% of annual income is required to buy a square meter of new housing. Nevertheless, Hungarians are less bothered by this fact than people in many other countries, as 92% of the population in Hungary owns their home and in most cases buying a home comes with the sale of an equally expensive second-hand good. house, but for young people who are starting families and looking for their first home, the capital’s real estate market certainly looks overvalued, concludes KPMG.
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