As with prices, our ideas about property prices have completely disappeared. We tend to believe that our homes are now scrubbing the boundaries of Western Europe from below. There is an incredible difference in the standard of living alone. But what is the truth about this? Do you know the prices of apartments in Brussels, Prague or Lyon?
Young people find it increasingly difficult to get their own homes
In all cases, we need to examine property prices with two main standards. On the one hand, how they relate to internal demand and living standards. Secondly, are regional or regional comparisons expensive or cheap?
25 years of indebtedness is not enough
If an average young person between the ages of 25 and 35 is determined to take home mortgage loans – willing to pay for 25 years – it is often not enough to succeed. Until a few years ago, such a personal decision made the first home purchases, now we have to face the amazing need for self-help!
20% equity, which was 37.3% a few years ago
The explosion of the Hungarian real estate market is probably characterized by the inflation of self-worth. Let’s look at a 55nm panel flat in Budapest, which we could buy for 15M for 5 years from its owner. 20% of self-sufficiency was needed, ie 3M forints.
In 2019 the price of the same apartment is 28M. Here, the 20% self-sufficiency is HUF 5.6M, which is almost twice the 2014 example. Our current HUF 5.6M (excluding inflation and present value) would correspond to 37.3% equity.
The logical question: During the last 5 years did this young person have a real chance to raise an additional 2.6M forints? 2.6M / 60 Months = Monthly savings of 43,333 Forints over 5 years, while housing and living have become more expensive.
We can buy 10 Budapest from the price of a London apartment
Deloitte publishes its Property Index every year. This way, we can get first-hand information about foreign prices from official sources. I gazed at the prices a bit and I was even surprised. I didn’t expect such differences.
Average square meter prices in major cities in 2017-2018
Prices are in euros. The estimate was made at a rate of 325 forints.
Let’s see, Budapest in this comparison is lagging behind, to say it is worth buying an apartment in Hungary. Now think about the fact that an average 85nm flat in Budapest came to $ 45,387,875 in 2017, while the same apartment went to 456,144,000 forints in London.
Find 300x more!
The difference between salaries is often used as a legitimate argument. Now think about it! The example housing prices (London-Budapest) are HUF 410,756,125. Calculating a 10-year period, we would have to spend HUF 3 422 967 per month on this, ie approx. € 10,532.
In 2018, “top managers” were second in the list of England earnings, earning an average of € 11,874 a month!
In Budapest, the average income is somewhere around $ 275,000 a month, equivalent to € 846. In order to be able to pay an average London property calculated on a Budapest scale, we would have to earn 12.4x more each month for 10 years, so that our salary increases in direct proportion to real estate prices.
The situation is getting worse in Budapest
You’ve just read a 2017 statistic. I checked how the average price per square meter in Budapest was on January 1, 2019. We paid an average of 724,650 forints per square meter. So real estate prices are rising steadily.
I didn’t really find credible data on foreign price changes, I didn’t want to search for the latest data for 2019 because housing was definitely not cheaper anywhere.
Budapest 2017 and 2019
On the basis of the figures the difference (at the same time) is 190 675 ft / nm. The difference for a 85 sqm apartment is 16 207 375 for two years. This means that you would have to save $ 675,307 a month in the two years who wanted to buy exactly the same apartment.
It is impossible to get this out of employee salary.
Today we are going to go without help
The process is very beautiful, which once characterized Western Europe. Property prices in central cities have been increasingly separated from the average wage of employees. This process is also evident in Budapest.
Our vision is not for anyone who is
- has no own real estate, the value of which has also risen
- has no jealousy
- does not have family support
- is not eligible for state aid