Rental prices in the centre of Budapest have fallen by 15 percent due to the pandemic
EnglishRental prices reached a peak in January this year; in the five years before that, there had been a 45 percent rise in average rents. As a result of the epidemic, prices in Budapest fell by 15 percent in the central districts, Gáborné Székely told növekedés.hu. The head of the housing statistics department of the Central Statistical Office (KSH) added that 12 percent of the flats in Budapest are vacant and their number is continuously growing.
What is the aim of KSH by introducing a new index of rental prices?
We examine a wide range of areas in housing statistics. In this way we can cover the development of new constructions, as well as the development of property market prices, both for new and used apartments. Until now, however, rental prices have been a white spot, which is no coincidence because this segment cannot be measured with traditional statistical tools.
We hardly have any data on this segment, and even the limited data which are available can only describe a specific moment, so we haven’t been able to measure the changing of rental prices so far. However, at ingatlan.com it is possible to monitor the data continuously, and now we can also use these data in KSH thanks to our current cooperation.
This year, the coronavirus epidemic and the restrictions imposed have had a strong impact on the rental market, too. What trends are we seeing currently?
Rental prices peaked in January this year, when they stood at 145 percent compared to the 2015 benchmark, meaning that the average rent rose by 45 per cent in the last five years.
In February, before the epidemic appeared in Hungary, there was a minor decline in rental prices, which can be considered an normal market process. However, we saw a significant fall after restrictions were implemented. This fall, however, was less noticeable in the outskirts than in the central areas.
In March and April, we saw an 8-9 percent decrease in rents at the national level, while in Budapest the average decline was over 10 percent; and in the city centre it even reached 15 percent.
To what extent can this reduction be due to the appearance of Airbnb apartments in the rental market?
We cannot measure this with the tools available to us, because we do not know exactly why a particular owner decides to rent out an apartment. However, it is clear that the appearance of apartment hotels in the long-term rental market had a significant impact on the price cut.
According to your calculations, how many vacant apartments are there in Budapest?
The last time we had collected data on this was during the microcensus in 2016, and then we found that 12 percent of flats in Budapest were empty. Since the change of regime, the number of vacant flats has been increasing steadily.
One explanation for this is that while before 1990 one household was only allowed to own one flat, after the change of regime it became more common that people owned several homes. The housing stock continuously expanded and, at the same time, the population decreased. Housing habits have become more diverse. Households use flats in many different ways, on a temporary or seasonal basis, for example, so there can be many different reasons why an apartment is empty.
Another survey five years ago also showed that many families do not put their second home on the rental market because they are afraid of the uncertainties, problems and risks involved in the renting process.
What is the reason that the number of people living in rental housing in Hungary is only one quarter of those in Western Europe?
The reasons for this also go back to the change of regime, when the state-owned rental housing stock was transferred to municipalities, and then the privatization of flats accelerated, which, incidentally, had already begun before 1990. This is a long-term process, as the number of flats owned by the municipalities is still declining every year. So, the reason is the decline in the community rental housing sector.
At the same time, the population decline has made it possible that second homes can be utilized in the private rental market. So, the number of privately owned flats on the rental market is gradually increasing, but even so, the private rental sector still cannot compensate for the lack of subsidized rental dwellings.
Is this year’s decrease in rental prices expected to be corrected by the market?
In May, the data showed a slight increase, then in June this trend came to a halt and there was a slight decline again. We will see when the July data arrive whether the rise measured in May continues or rather the trend in June prevails in the market.
