Real estate market: real growth or another bubble?

We can see the signs showing that the Hungarian real estate market is in stable growth – but there are also signs that show that some people on the market are generating a bubble, and it is not easy to see what the reality is.

If we look at the trends in the market the sudden increase of housing and rental prices can be really shocking. But from the point of other larger cities like Győr and Sopron it can be absurd to think of the recent growth as a bubble, according to Attila Déry, analyst of Otthon Centrum.

Growth began early in 2014 when trust began to return to the market and demand began to grow. Therefore more and more people decided to put their money in real estate – prices are growing and impressive revenue can be gained by renting, so this is hardly surprising. This is of course a self-generating process as if you invest in real estate it is important to invest as early as you can so you can gain higher profits.

These are the signs of a bubble, but there are several factors working against it. Prices are on such a high level that this itself restricts speculations – especially in the capital. And while loans are becoming cheaper, they are following the real estate boom slowly, so the demand of investors is finite.

Demographic reasons behind real estate transactions will guarantee a certain level of activity on the market even if the current boom consolidates – it is likely that there are several hundred thousand people in the country who will decide to move into new homes in the near future according to Déry.

The normal processes of the market are slower but strong: prices may drop slightly after the current boom, but it is likely that trust will not vanish again as it did after the crisis.

(Source: http://www.vg.hu/velemeny/elemzes/novekedes-vagy-lufi-az-ingatlanpiacon-457226)