What changes can be expected in terms of real estate prices this year? How does the current economic situation affect the sales market? What can owners and buyers expect?
The market momentum of the last decade has stopped. The number of real estate transactions has decreased significantly. However, prices continue to rise on the market for newly built properties. And the prices of high-quality and modernized used properties are also high. Is it a good decision to wait as a customer at this time?
Current sales situation
The sales situation is very complex nowdays. For those interested in real estate, it is already known that the previous desire to buy real estate has die down in the past year. The turning point was clearly the unfavorable development of the geopolitical situation, but the increase in loan interest rates did not favor the market either. It can be observed that those who have cash prefer to wait to buy, hoping for a more favorable development of the real estate market. On the other hand, those who would like to buy but do not have sufficient capital face record high loan interest rates. Therefore both types of customers are waiting for the price drop and the favorable development of the economic situation.
Other factors besides clear inflation also contribute to the further increase in purchase prices. Just as the price of live labor and construction materials doesn't decrease in the case of an apartment under construction in the same way, the modernization of an existing property requires an increasingly large financial investment.
Furthermore the rising utility prices due to the energy crisis made green investments particularly attractive. In the case of newly built properties the selling price per square meter of the properties increases by definition since the amount of overheads is reduced due to modern mechanical and energy solutions,
Changing the conditions for green home loans from the spring of 2023 can bring an improvements.
Is there any chance of a decrease?
The big shopping spree has stopped. Buyers expect that the real estate supply will expand due to the crisis, which could have a price-reducing effect.
However the price reduction has not yet occurred for modern properties. There is really no reason to drop the price due to the still high and ever-increasing construction costs in the case of newly built or well-maintained properties. A decline in purchasing power could fundamentally reduce prices, but currently there is still no oversupply of high-quality, modern properties on the Budapest real estate market.
On the other hand, flexibility can be observed in terms of real estate prices in the event of a lack of energetic, technical and aesthetic developments. Lower-quality properties with high energy requirements and in need of renovation and modernization depreciate faster. So it is more worthwhile to make a deal if there is a solvent demand, even at a lower price than planned.
What can buyers and owners expect?
In any case, the paying buyer enjoys more respect now than in previous years among property owners who really want to sell. Typically only investors with cash and highly motivated buyers who are forced to transact are currently active in the market. The latter group is usually due to a change in family situation or because they have already sold their previous property. Therefore they are forced to buy a new property as quickly as possible.
No significant price reduction can be observed for now. The calculations of the buyers who were waiting for it did not work out, as the owners are also waiting. Those who are not forced to sell, are not interested in lowering the price of the properties in the absence of demand.
However it is worth taking seriously if a solvent, motivated buyer appears. Until now, there was an oversupply of buyers. It was relatively easy to sell real estate at a higher price, but due to the previously listed factors, this has now changed significantly. If the real goal is to sell, it is not recommended to store the property. It is worth negotiating more seriously about the purchase price.
It can be said that this year the market is divided. It is not worth holding on to the purchase price for properties that are outdated and in need of renovation, because their condition and marketability will only continue to deteriorate.
Owners do not reduce prices for well-maintained, technically modern, new or newly built properties, despite the fact that demand has stopped. So there is no point in hoping that a significant price drop will occur there.