Common Real Estate Buying Mistakes in Hungary

Published on October 3, 2025 and written by Cyril Jarnias

Real estate investment in Hungary, particularly in Budapest, is attracting an increasing number of foreign investors. However, venturing into property purchase in this Central European country requires thorough preparation and knowledge of local specifics. Here is a comprehensive guide to common mistakes to avoid for a successful real estate investment in Hungary.

Ignoring Exchange Rate Risk: The Foreign Investor’s Achilles Heel

One of the biggest threats to your real estate investment in Hungary is the fluctuation of the Hungarian forint (HUF). Unlike other European countries, Hungary has maintained its own currency, exposing foreign investors to exchange rate risk.

Historically, the Hungarian forint tends to depreciate against the euro and US dollar. This depreciation can erode your investment’s value when converted back to your home currency. For example, even if your property’s nominal value increases in forints, you might realize a loss once converted to euros.

To mitigate this risk, it’s crucial to:

• Closely monitor HUF/EUR or HUF/USD exchange rate movements
• Consider exchange rate hedging strategies
• Index your rents to the euro when possible, to protect your rental income

Underestimating Location Importance: Neighborhood Choice is Key to Your Success

Choosing the right location is crucial for the success of your real estate investment in Hungary. Budapest in particular is a diverse city with neighborhoods having very different characteristics. A common mistake is focusing solely on price per square meter without considering each neighborhood’s specific features.

The most sought-after neighborhoods for real estate investment in Budapest are:

• District V: The historic and tourist center
• Districts VI and VII: Lively areas with numerous bars and restaurants
• District XIII: A modern district undergoing rapid development

However, each neighborhood has its own advantages and disadvantages. For example, District VIII, once with a poor reputation, is undergoing rapid transformation and may offer good investment opportunities, though caution is needed in choosing the exact location.

It’s essential to thoroughly study different neighborhoods, their development potential, and ongoing or planned urban projects. An on-site visit and advice from local experts are indispensable for making the right choice.

Neglecting Legal and Tax Aspects: A Path Full of Pitfalls

The Hungarian legal and tax system can be complex for foreign investors. Not properly understanding these aspects can lead to unpleasant and costly surprises.

Here are some key points not to overlook:

• Ownership structure: In Hungary, it’s possible to purchase real estate as a foreign individual, but certain restrictions may apply, particularly for agricultural land.
• Taxes and duties: The tax rate on rental income is 15% in Hungary, which is relatively advantageous. However, other taxes like property tax and VAT on new constructions must also be considered.
• Administrative formalities: Property registration with local authorities is mandatory and can take several weeks.

It’s highly recommended to hire a local lawyer specialized in real estate law to guide you through these procedures. This might seem like an additional cost, but it’s an investment that can save you many long-term problems.

Overestimating Rental Yields: Beware of Promises That Sound Too Good

A common mistake is blindly trusting promises of high yields made by some real estate agents or developers. It’s not uncommon to see ads promising net returns of 6-7% or more. However, these figures are often overestimated and don’t account for all costs associated with managing a rental property.

To get a realistic view of yields, you must consider:

• Vacancy periods
• Management fees if using an agency
• Maintenance and renovation costs
• Taxes and duties

A realistic net yield for a well-located property in Budapest typically ranges between 4% and 5%. While this figure might seem modest compared to some promises, it remains attractive compared to other European capitals.

Ignoring Property Condition and Renovation Costs: The Love-at-First-Sight Trap

Budapest is full of beautiful historic buildings that can be captivating at first glance. However, don’t let the charm of old architecture blind you to the property’s actual condition.

Many buildings, particularly in the city center, require significant renovation work. Underestimating these costs can seriously impact your investment’s profitability. Here are some points to check carefully:

• The building’s general condition, including roofing and common areas
• Electrical and plumbing installations
• Thermal and acoustic insulation
• Potential presence of asbestos or lead in older constructions

It’s highly recommended to have a complete technical audit performed by a professional before any purchase. This will give you a clear view of necessary work and its costs.

Not Anticipating Market Changes: The Importance of a Long-Term Vision

The Hungarian real estate market, particularly Budapest’s, has experienced strong growth in recent years. However, like any market, it’s subject to fluctuations. A common mistake is basing projections solely on past performance without considering possible future developments.

Several factors could influence the Hungarian real estate market in the future:

• Government policies regarding housing and foreign investment
• Evolution of the Hungarian and European economy
• Demographic changes and migration trends
• Development of urban infrastructure

It’s crucial to adopt a long-term vision and diversify your investments to minimize risks. Don’t put all your eggs in one basket by investing only in one property type or a single neighborhood.

Conclusion: The Key to Successful Investment in Hungary

Investing in Hungarian real estate can be an excellent opportunity, but like any foreign investment, it carries specific risks and challenges. By avoiding these common mistakes and adopting a thoughtful, well-informed approach, you significantly increase your chances of success.

The key to successful real estate investment in Hungary lies in meticulous preparation, thorough understanding of the local market, and reliance on experienced professionals. Don’t hesitate to take the necessary time to thoroughly study the market, visit multiple properties, and consult local experts before taking the plunge.

With its beautiful architecture, rich culture, and real estate market still affordable compared to other European capitals, Budapest offers genuine opportunities for savvy investors. By avoiding these common pitfalls, you’ll be well positioned to get the most out of your real estate investment in Hungary.