Sales of property in Hungary plummeted at the end of 2008, but the upside is that demand for rental accommodation has shot up, estate agents report.

The fall off in sales was especially acute in the second half of last year, The Budapest Times reports.

But, despite the traditional reluctance of Hungarians to rent (around 90% of property in the country is owner-occupied), agents report a strong rise in demand for rental accommodation.
Imre Leg?, owner of rental portal alberlet.hu, said,: "We have recorded 10-20% more rental transactions since November."

But many believe the trend is temporary - a direct effect of the credit squeeze. Raymund Petz of GKI Economic Research believes Hungarians will start to invest money in property as soon as credit lines start to ease. So far there are few reports of price falls. Petz describes the market as simply "frozen".

Meanwhile, a survey by one of the country's largest estate estate agents, Duna House, shows that foreign developers are pulling out of the Hungarian housing market. The company estimates there are currently some 4-5,000 newly built homes in Budapest that are practically unsellable.

Foreign buyers have now also virtually disappeared from the market, the website index.hu reports. The large numbers of foreign investors seen previously - Irish, British and Spanish - had already fallen off sharply as Hungary's economic condition deteriorated even before the credit crunch started in earnest.

Robin Bowman