Profile: Hungary: Hungarians are used to the Irish flying in for the weekend to guzzle goulash, drink cold beer - and make a swift decision to buy a property. Daniel McLaughlin reports from Budapest
They say there are three prices for property in Budapest: one price for locals, a higher one for foreigners and, finally and most exorbitantly, a price for the Irish.
Many Hungarians' image of the average weekend Irish visitor to their capital is a green-shirted, red-faced fellow, flush from guzzling goulash and cold beer and dragging his euro-laden wallet around town in search of an estate agent with whom to deposit it.
Only the Israelis can rival the Irish for recent impact on the Budapest housing scene, which is awash with profits made and mortgages taken out on Irish property.
Hungary's political and financial stability, its well established land and property laws, and the relatively low prices of apartments in Budapest have helped this glorious city become a magnet for Irish investors with a warm and fuzzy feeling for property after making quick money back home.
In the middle of last year, after a sudden six-month leap in property prices, the market slipped back by 5 to 10 per cent to find a more realistic level, agents and analysts say. It is now set for steady long-term growth rather than spectacular spikes, they insist.
"Forget about a Dublin-style boom here," said Miklos Horvath, a property advisor with the Helpservice Consultancy in Budapest and Ireland's Central European Properties (www.ceprop.com).
"Now investors should be targeting good capital appreciation over five to 10 years."
Few cities can rival Budapest's location on the Danube, with green hills rising behind the castle in elegant Buda, and the grand parliament on the Pest side giving way to tree-lined boulevards that swish through a maze of shady, café-strewn streets.
For the property-hunter, a few reassuring hard facts back up the charm: Hungary's land registry system is as old as the Austro-Hungarian empire, and holds few surprises; political and economic tremors are rare and brief; Hungary is on course to adopt the euro in 2010; and the influx of foreign flat-hunters has not created an unsustainable "bubble".
"The advantage of buying in Budapest compared to neighbouring countries is in the price," says consultant Krisztina Tuzko of Flottinvest (www.flottinvest.hu), whose clients are about 80 per cent Irish or British.
"Hungary is really the centre of Europe and real estate prices are still quite low - though not for locals - compared to Prague. We are past the big boom, and real estate prices now seem to reflect real values."
Mr Horvath, who deals almost exclusively with Irish customers, says the vast majority of them arrive in Budapest with €100,000-€150,000 to spend.
That puts them in a different bracket to most of the Hungarian buyers, who usually have €50,000-€60,000 in hand and dominate that price range, being able to negotiate and close a deal more quickly and easily than a foreign rival.
A huge 80 to 90 per cent of Budapest property is mortgage-free, experts say, but Hungarians tend to have little capital outside that locked up in their property.
As the financial services industry here matures, and banks offer more ways to borrow, many property analysts expect another surge in demand, this time from locals who take out first mortgages to purchase small homes, or people who sell their flat to buy something bigger, with the help of a loan or mortgage.
This is expected to increase demand for larger apartments, which are relatively scarce in central Budapest.
Increasing personal wealth among Hungarians and competition between lending banks should also improve the outlook for the local buyer, while also perhaps turning him into a more serious competitor to the foreign investor with €100,000 in his pocket.
According to Doron Dymschiz, managing director of the Duna House property agent (www.dh.hu), the surge of foreign investment into Budapest also created a huge supply of flats for rent, which current demand is struggling to soak up, despite the presence of more than 10,000 foreign students and a large contingent of executives, diplomats and the like.
As a spate of newbuilds comes onto the market in the next two years, oversupply could increase or, Mr Dymschiz predicts, continuing foreign investment and the growth in financing options for potential Hungarian buyers will keep the market balanced.
In talking to Hungarian estate agents, or even the average Budapest native, it is easy to be bamboozled by their quick-fire numerical reference to the city's districts, and apparently instinctive knowledge of their boundaries and investment potential.
Thankfully, most city maps denote which districts are which, but it will take the knowledge of an agent or a long-term Budapest resident to tell you which is on the way up, which is already overpriced and which is the next big thing for the property hunter.
For the record, Mr Horvath spoke well of parts of Districts 5, 7, 8 and 9 but warned that, even within districts, "there can be sharp street-by-street differences in price. Better to invest in a poorer street now" to make bigger gains later.
Mr Dymschiz of Duna House - Hungary's biggest estate agent, with a website listing some 2,000 available properties - also had praise for Districts 8 and 9.
"It is still a little rundown in parts, but it is now coming up fast," he said of the eighth district. "Prices will go up, and there are some beautiful old buildings there, as well as newbuilds." Mr Horvath says the simplicity of buying property here is a key factor to foreign buyers.
"With a 10 per cent down payment you can get a lease. Then within 30 days the whole deal can be done - the transfer of cash, a check on the legal status of property, and the parties can meet to sign contracts. Then the documents can be handed to the land registry," he says.
Although foreigners need to be granted a permit by the Hungarian authorities to buy properties here, Mr Horvath says he knows of no one being turned down.
He does have a couple of warnings for potential Irish investors, though.
"Making a verbal offer is okay, but if you sign anything it can be treated as legally binding and court action could be taken if you back down," he cautions.
He also advises patience.
"Spend three of four days sniffing around, meeting different agents and getting a clear view of the market. Then go away and have a think and come back.
"Some people fly in on Friday, spend two nights in the pub and then see a place on Sunday morning and buy it," without checking the details, he says.
"The easygoing way of many Irish clients can mean they are not careful enough. Others, you could say, have simply been foolish."
AGENTS
Duna House property agent www.dh.hu
Krisztina Tuzko of Flottinvest www.flottinvest.hu
Miklos Horvath
Helpservice Consultancy
Central European Properties www.ceprop.com
