Real estate prices have gone down in the outer districts of Budapest due to the epidemic G7
The epidemic has brought a spectacular turn to the real estate market in Budapest. According to data collected by the real estate.com G7, the sharp rise in downtown prices from previous years came to a halt, and there was even a district where it turned around. In the suburbs, however, real estate prices, especially single-family homes, have risen in price.
Downtown price explosion
Since the pandemic, it has been suspected that the current situation may change the beginning of real estate market trends. In recent years, Budapest has seen an incredible rise in prices, which has not affected the various districts of the capital. In our article two and a half years ago, we showed how real estate prices in Budapest occupied on the street level, and the graph shows quite spectacularly that the period between 2013 and 2017 was the best in the inner districts of Pest.
One explanation for this was the proliferation of AirBnb. Many people try to ride the booming tourism in Budapest by buying an apartment for investment purposes, which is then given out to foreigners visiting here. This, in turn, pushed up demand, and so did the prices per square meter in the 5th, 6th and 7th. and VIII. district.
This process continued after 2017, even as price increases slowed. According to the data of the statistical office, the lowest point in 2013 and the last year before the epidemic, 2019, as well as in the mentioned districts, increased the most in the average price of dwellings sold. The rise was more than threefold everywhere.
As more and more people were looking for an apartment or house a little further away due to the extremely expensive real estate in the city center, the explosion of the inner districts had already dragged down the prices of the rest of Budapest. According to László Balogh, the leading economic expert of real estate.com, this migration process started to accelerate just before the epidemic. As a result, the difference between 2017 and 2019 was no longer as spectacular, and even in some suburban districts, real estate prices rose faster than in downtown Airbnb.
Quarantine + home office = suburb
The epidemic erupted in this situation, reversing the entire metropolitan real estate market in an instant. Due to the collapse of tourism, the properties used for such purposes were suddenly vacated, their owners either tried to rent them out for a longer period of time, or they got rid of them. Meanwhile, the pandemic and the measures taken to stop it have also dampened interest, meaning that demand has also fallen sharply.
Just as the positive Airbnb effect, the negative mainly affected the inner districts. The median square meter of houses and flats advertised on real estate.com stagnated in virtually all inner districts between the day before the first confirmed coronavirus case and November 3 this year. According to László Balogh, moreover
the epidemic in these areas did indeed bring down prices in the first round, but it didn’t last long and prices started to bounce back nicely.
A VII. district was still cheaper at the beginning of November than on March 4, 2020, and the increase in median prices remained below 5 percent in the I, V, VI, VIII, IX. and also in District X.
At the same time, however, there was a specific price explosion in the outer districts. Because of quarantine, many have realized that it is easier to get through such a situation in a garden house, and the home office has significantly reduced the cost and time required to go to work for many people. Already last year’s population figures show that many people have moved out of the cities to the agglomeration.
In the case of Budapest, however, many did not go outside the city limits, but only to an outer district. While prices in the city center stagnated this year and a half, in the 18th century. In Poksszentlőrinc-Pestszentimre, for example, prices rose by almost 30 percent, but there was an increase of more than 20 percent in Soroksár (District XXIII), Rákosmente (District XVII), Kispest (District XIX) and the 16th. district*Árpádföld, Cinkota, Mátyásföld, Sashalom, Rákosszentmihály van.
From apartment to house
The difference in the price of houses is particularly striking for apartments (you can switch between property types by clicking on the buttons on the map above). In Budapest as a whole, the prices of the former were narrow 9, while those of the latter increased by more than 22. Although there were some in the outer districts where housing became more expensive, but in places it all grew, and so there were no serious differences. And in much of the city, the rise in price of houses was much more spectacular.
Incidentally, this also changed the order of the districts in terms of price per square meter. The two outer districts of Buda, the II. and XII. preceded the Castle District, the XVI. district became more expensive than Józsefváros, and Óbuda also left Erzsébetváros.
If we look not at the price per square meter, but at the advertising price, then the family-married XVI. district is already the third most expensive in the city, with an average property price of over 88 million (before the epidemic it was HUF 71.5 million), and Rákosmente overtook five districts on this list in more than a year and a half.
These changes are also evident in the number of advertiser telephone contacts requested on real estate.com. Taking into account the data of October of the last six years, it is clear that the number of telephone numbers compared to 2016 is XXIII. district advertisements were less frequent in all districts, but after the epidemic, the downturn affected the inner city districts (districts V, VI, VII and 2021 as well).*Comparability here is somewhat hampered by the fact that the epidemic situation is sure to affect interest, and in October and this year, the epidemic was on the rise again..
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