Consider that the Euro will fall at some point in the next 6 months or so in my view since it is now massively overvalued. Since HUF is now linked to a basket of currencies and if Euro falls against most currencies (which it will) as the economic realities come to light then HUF will appreciate against the Euro without question.

I wonder if there is an oversupply of apartments in Budapest. A quick scan of properties for sale on findaproperty.com reveals the following

Prague - 30 properties for sale
Bratislava - 15
Sofia - 44
Bucharest - 52
Budapest - 780 (The zero is not a typo)

That's quite interesting Brett S and says a lot about the property supply in the other markets of Prague, Bratislava, Bucharest and Sofia.
Noreen

There is a large amount of undesireable apartments - older, even if renovated will not sell easily unless the entire building where they are located are also renovated + they have to been in good locations. There is a good supply of new builds, - not oversupply. Nearly the entire first phase of the development that I bought into was sold 6 months BEFORE completion.

It is just a fact that older apartments will cost more to heat and run and that the locals want new apartments as a result.

Office market is booming and Budapest is on a mission - from having the lowest amount of office space from amongst the capital cities of Europe to match the European average / exceed it.

This is happening as we speak and will continue for the forseable future since Budapest is so far behind the EU average.

Residential property market will excel as a result as International business create jobs and as international workers require somewhere to stay - preferrably new build quality apartments.

There is a big reduction in new build apartments being built in Budapest right now, the reason being - VAT tax changes that have hurt many developers as a result. As a result of these changes the tax due that used to be paid after the development is sold by the developer is now due up front. Add to that the reduced availability of finance and we have a situation of reducing supply of new builds thus pushing up the prices.

The government is putting in place tax cuts for 2009, whilst at the same time restructuring the property market to EU standards with regards to rules. CGT rules being the biggest single change - from 15 yrs from purchase to sale to get lowest CGT rate to 5 yrs. These rules are put into effect in April.

Hi Richard

What would you say were the big negatives of investing in Budapest right now?

Cheers

Good question.

Unemployment is around 8% - a problem that all this office development should partially solve.

Hungarian mental attitude towards their current situation - older generation still stuck in the communist mentality that work should be provided on a plate.

Hungarians - although very friendly are apparently the least trusting - and thus I suspect probably more honest than most of these new EU accession countries.

The population are very political - this could be seen as good and bad, however in my view they seem to be rather popularist in the support they give resulting in bad policy. It is how their budget deficit got to rediculous proportions with associated lies from politicians to hide their errors.

This situation came to a head in 2006 when there were riots - since then there has been a sea change - anti corruption is on everyones lips and will not be tolerated whatsoever once made public.

For every down side there are greater upsides to the situation. I am not usually an optimist ....... but with Hungary there is no doubt in my mind.

Richard

What you say is interesting.

I can see your point about buying at the bottom and so on.

I can even see the point that Hungary may be a good long term bet...but I can't really see the evidence that it has reached the bottom.

With inflation at over 7%, the band gone - which I think will mean the currency will almost certainly weaken over the longer run, certainly without higher rates - and GDP growth of 0.8% in Q4 last year, plus all that public debt, etc etc, I can't see the optimism. Only that Hungary does seem to be confronting its problems.

The fact that unemployment is so high - highest in the EU - is actually a good sign, to me, because the ranks have been largely swollen because the government is slashing the bloated public sector.

At best, surely then, if we're reasonable (and I know you're a fan) it has to be a wait and see market?

Have you tried to sell any property in Budapest? I currently own a high spec apartment and can not sell it, at ANY price and have had no interest from any buyers. On top of this no hungarian estate agents want to even try to sell it!
They must all be on big commissions from developers and push new builds as a result.
I would DEFINATELY NOT have bought in Budapest if I had to do it all again.

Anyone any thoughts/help?

Where is this apartment?