If a crisis situation arises in any area, outside observers and stakeholders ask the same question: for how long? How long can the downturn continue in a given market? How much longer can prices fall? And by how much? The answer, of course, is usually quite complex, as it is influenced by a number of data and external factors that need to be considered and processed by experts.
“As a key player in the market, as a downtown real estate specialist, we have an absolute duty to constantly monitor the situation,” begins Ben-Ezra Orran, an expert at Central Home. – “We can look at the current situation from two aspects.
One is nothing more than the phenomenon of the pandemic and the virus itself, as the current restrictions narrow the scope to maneuver in all sectors of the economy, including the real estate market in Budapest and the city center. The other aspect is the actions of the government and the MNB, who try to support the market and balance or stabilize the negative effects. ”
The impact of the epidemic was basically clear throughout the year: there was much less movement in the downtown real estate market, a significantly smaller active customer group and also a significantly declining group of investors.
By implication, the primary reason for this is that while in previous years a large number of foreign customer groups were quite markedly present in the city center, they are now physically forbidden from traveling here, so they are almost completely left out. In addition, the general uncertainty factor, the decline in the confidence index and the stagnation of investor sentiment have obviously pushed prices down. For understandable reasons, fewer and fewer are now daring to take risks, which is having a negative effect on the market.
“We discuss with our colleagues on a daily basis how long the market can still go downhill,” says Ben-Ezra Orran. – “Of course, we cannot predict how long the crisis will last, how long the economic difficulties will last, as conditions change dynamically day by day, week by week.
Based on the data currently available, we believe with Central Home’s team of experts that there will be a “W” shaped crisis. So it is likely that sometime between spring and summer 2021, the re-emergence of the downtown market in Budapest will begin. ”
According to Central Home, the price of certain types of real estate will probably continue to fall until the spring of 2021, possibly by summer. This could mean a price drop of more than 30% compared to end-2018 prices. Given the current market conditions, it is believed that even a further 10% price drop is conceivable in the coming months in the Budapest market.