Investing in Real Estate in Szombathely: The Discreet Bet of Western Hungary

Published on April 23, 2026 and written by Cyril Jarnias

Long overshadowed by Budapest and major regional metropolises, Szombathely is starting to appear on the radar of astute investors. Located on the Austrian border, in the heart of the Western Transdanubia region, this city of nearly 78,000 inhabitants combines a still-affordable real estate market, a strong industrial economy focused on automotive and logistics, and a highly structured development strategy extending to 2030.

Good to know:

Investing in real estate in Szombathely is based on the structural transformation of the city, marked by the development of road and rail infrastructure, accelerated industrialization, decarbonization projects, and the rise of the health and R&D sectors. This dynamic offers an investment scenario based on a long-term trajectory rather than short-term speculation.

A still affordable local real estate market in a fast-rising country

To gauge Szombathely’s potential, one must first place the city in the Hungarian context. Nationally, the residential market is described as one of the most dynamic in the European Union, with steady price growth of around 6% per year, and even more pronounced increases in recent years: +5.8% in 2023 across all segments, +11.5% for new builds.

Price indices published by Eurostat and the Hungarian National Bank (MNB) confirm this trend: in spring 2025, the housing price index was rising by about 12 to 15% year-on-year, well above real inflation. Forecasts from OTP Mortgage Bank and other major players anticipate an average national increase of about 15% for 2025, with up to 20% in the most sought-after areas.

Warning:

In the current bullish market context, the city of Szombathely still presents moderate price levels, significantly lower than those in Budapest, while benefiting from the overall positive market dynamic.

Price levels in Szombathely: The entry point

The most recent data shows a relatively homogeneous residential market, with slight upward pressure.

For comparison, the national average for new housing reaches about 1.2 million HUF/m² (≈ €2,900) and Budapest flirts with 1.5 million HUF/m² for new builds, almost double that of Szombathely. So, we are clearly dealing with a “dynamic provincial” market, but one that is still in a value zone.

Listing examples illustrate this price range well:

To this is added an offer of buildable land between 4.5 and 18 M HUF for plots of 700 to 1,000 m², which also opens up prospects for development or custom construction.

Yields, rents, and ratios: What an investment in Szombathely returns

In Hungary, the average gross rental yield was around 5% in the third quarter of 2025. Very touristic Budapest offers a range between 3.5 and 8% depending on neighborhoods and strategies. Szombathely, a more residential and less touristic city, logically sits below these peaks but remains in a coherent zone for a stable secondary city.

Rental yield and price-to-rent ratios

Available estimates for Szombathely show gross yields around 3 to 3.5% for standard long-term rentals.

A price-to-rent ratio around 30 means that, in theory, it would take about 30 years of rent to “pay back” the purchase price, without considering expenses or taxes. On an international scale, this is typical of a stable European city that is more buyer-oriented than renter-oriented.

On the rent side, we observe:

Relative to prices per m², these figures confirm a more moderate yield profile than in some Hungarian cities with high rental pressure or in the tourist segments of Budapest, but one that is consistent with a “secure” positioning and lower volatility.

Airbnb and short-term rentals: A small niche market

In the short-term rental segment like Airbnb, Szombathely obviously has nothing in common with major tourist capitals. The market remains very limited: about 24 active listings according to an analysis covering the period September 2024 – August 2025. But this small volume can actually play in favor of well-positioned early entrants.

Some numerical benchmarks on this micro-market:

Seasonality is pronounced, with a revenue peak typically in December and a trough in February. The average nightly price peaks in August, but with lower occupancy, suggesting more short stays with higher unit value in summer, and more consistent occupancy related to events or business travel at year-end.

Tip:

In Szombathely, short-term rentals constitute a niche segment. They can be interesting for well-located and well-managed apartments, but their scale remains insufficient to be the sole driver of an investment strategy. This approach should rather be considered as a complement or a diversification lever for a few targeted properties.

Who lives, works, and consumes in Szombathely?

For a rental investor, understanding the demand profile is as important as tracking price indices. Szombathely is neither a major student city nor an international tourist capital, but a strong regional center with very specific demographic and economic characteristics.

A living area of over 130,000 inhabitants

The city has about 78,000 official residents, but its daytime population is 15,000 people higher, and the wider urban area reaches over 134,000 inhabitants. More than half of the residents of Vas county live in this urban area, making Szombathely the economic, commercial, and administrative heart of a largely rural territory.

Some structural indicators:

The age pyramid shows a strong presence of 40‑49 year olds and 50‑59 year olds, reflecting a working-age population and gradual aging. The birth rate remains low; the city faces classic Central European challenges: aging, low rate of return for young graduates, attractiveness sometimes deemed insufficient compared to peripheral villages or nearby Austria.

Good to know:

Investing in this type of property involves a tenant base primarily composed of stable households, families, and workers. Unlike a university town, there is no massive turnover of young adults, which can mean greater rental stability.

An economic fabric dominated by automotive and logistics

Szombathely plays the role of a regional economic platform, particularly for industry and logistics. One of the pillars of the Hungarian economy is automotive, and the city concentrates several major subcontractors for international groups, also active in electronics (mobile phones, medical devices…).

However, the local economy presents a dual face. On one side, an unemployment rate below the regional average, recent labor shortages in hospitality, construction, or some low-skilled industrial functions. On the other, a strong dependence on a few large groups, with decision-making chains often external to the city, limited local added value, and vulnerability to automation and Industry 4.0 shocks.

Example:

The city of Szombathely and Vas county in Hungary illustrate strong cross-border mobility with Austria. Many residents work in neighboring Burgenland to benefit from higher wages, while living and spending their income locally. This phenomenon is complemented by a reverse flow of Austrians coming for shopping or proximity tourism, which stimulates local demand for shops and services and directly influences the region’s real estate market.

For an investor, this configuration creates several effects:

– higher real incomes for a part of the population (those who work on the other side of the border), hence a more comfortable rental capacity than suggested by the local average net salary alone;

– a rental market supported by its function as a regional commercial and logistics center, with housing needs for workers, detached managers, technical service providers;

– a certain stability, as long as the border remains fluid and major industrial players remain in place.

A city massively investing in its infrastructure

One of the main drivers for the appreciation of a real estate market is the quality of its accessibility and infrastructure. From this perspective, Szombathely is at the heart of several major projects that can transform its position on the Hungarian and cross-border economic map.

Highways, bypasses, and new connections

A flagship project involves the construction of a new approximately 40 km four-lane highway, intended to connect Szombathely, Körmend, and Kőszeg. With an estimated budget of 200 billion HUF, this project is already advanced administratively: environmental permits have been issued and funds for land acquisition are committed (500 million HUF one year, 1.5 billion the next). This infrastructure is to be linked with a western bypass of Szombathely, the start of a future M87 towards Kőszeg.

Good to know:

The city aims to strengthen its position on east-west axes, consolidate its role as a logistics platform between Austria and Hungary, and optimize the use of its existing industrial zones.

A modernized rail network

The Sopron – Szombathely – Szentgotthárd railway corridor underwent a major renovation: modernization of signaling, electrification between Szombathely and Szentgotthárd, construction of a rail flyover, securing of level crossings, extension of freight yard tracks up to 750 m for international freight trains. The total cost was nearly 198 million euros, largely financed by the EU Cohesion Fund.

Result: the travel speed increased from 60–80 km/h to 120 km/h, load capacity rose, and the number of passengers on the line jumped by 20 to 26%. Four air-conditioned electric trains have been put into service, improving the attractiveness of rail for daily commuting.

For a real estate investor, these improvements translate in the medium term into:

Good to know:

Strengthening transport links to Szombathely improves access to neighboring towns and nearby industrial hubs. This increases residential appeal for commuters and leads to a gradual appreciation of neighborhoods well-served by the new infrastructure.

An exceptionally large industrial park for a medium-sized city

Near the planned route for the M87, Szombathely has an industrial park of about 290–300 hectares, a fairly rare size on the Hungarian scale. This park, connected to railway projects operated by GYSEV, is at the heart of the “logistics hub” vision promoted by the government.

The city is also integrated into several business zones: Northern Industrial Park, Sárdi-éri, Claudius Technological and Industrial Park. New industrial investments are already underway, such as the opening of a new production unit by Schaeffler Savaria Kft.

Concretely, this means that demand for nearby housing for employees of these sites should remain sustained, particularly in residential areas in the north of the city and along the main access routes.

Szombathely2030: Climate, health, a “green” city, and new neighborhoods

Beyond infrastructure, the municipality has adopted a ten-year development program, “Szombathely2030”, which structures urban evolution around several pillars: green city, health-conscious city, supportive and safe city, industrial transformation, citizen participation.

A very large-scale decarbonization strategy

The energy and climate component is particularly ambitious. The city has committed to an investment plan of about 435 million euros to drastically reduce its CO2 emissions, energy dependency, and operating costs by 2030. Among the objectives:

– deep energy renovation of about 32% of the private residential stock to achieve near-zero energy levels;

– modernization of the district heating network to reduce losses and connect different sectors;

– raising the share of renewable energy in district heating to 75%, notably through industrial heat recovery and strengthening biomass capacity (new boilers for a total of 8 MW);

– installation of solar panels and heat pumps aiming for an annual production of over 107 GWh, covering 75% of the electricity needs of public buildings and street lighting.

For investors, this direction means two things:

1

Non-renovated older buildings lose appeal, while new or renovated buildings with high energy standards are valued.

Economic diversification towards health and R&D

To reduce its dependence on automotive, Szombathely is betting on an “economic second pillar” around health and medical technologies, capitalizing on the territory’s assets: spa tradition, sports rehabilitation, health tourism.

The roadmap notably includes:

– the establishment of companies from the health and medtech sector on dedicated sites;

– the creation of a large R&D and training center of about 25,000 m², at an estimated cost of 25 million euros;

– enhancing the capacity of local universities through new laboratories and specialized programs.

5000

The strategy is expected to result in the creation of around 5,000 jobs in a new production environment.

Urban regeneration: New neighborhoods, mixed-use centers, reasoned densification

The urban structure of Szombathely consists of five main zones: peripheral industrial belts, a green belt along the Gyöngyös and Perint rivers, a multifunctional hyper-center, a recent commercial belt at the city entrance, and inner and outer residential belts (integrated former villages).

Several projects specifically target underutilized or derelict areas:

– redevelopment of former military or industrial sites (brownfields) close to the center, often hindered by land complexity, but with considerable potential for mixed-use operations (housing + services + culture);

– transformation of the former “Hussars” barracks area, with a vision for a new central neighborhood mixing housing, cultural facilities, services, green spaces;

– renovation and extension of the city center, with a project of nearly 1.5 billion HUF (including 876 million in EU funds) which has already modernized several strategic streets (Kőszegi, Király, Szent Márton).

For investors, the challenge is clear: identify sectors set to change (proximity to renovated major axes, brownfields to be redeveloped, residential areas still undervalued on the edge of the center) and anticipate gradual gentrification.

Acquisition costs, taxation, and legal framework for foreigners

Investing in Hungary requires mastering a fairly codified legal framework, which obviously applies to Szombathely.

Who can buy and under what conditions?

The basic principle: citizens of the European Union, the EEA, and Switzerland can freely acquire residential properties (excluding agricultural and forest land). Nationals of third countries (post-Brexit United Kingdom, USA, Israel, etc.) must obtain an acquisition permit issued by the county government office.

The permit procedure includes:

– submitting a file (preliminary contract, recent land registry extract, copy of passport, criminal record certificate, etc.);

– an indicative processing time of 45 days, often between 45 and 90 days in practice;

– an application fee in the order of 50,000 to 65,000 HUF per property (≈ €130 to €160), with some reductions in specific cases.

The permit can be refused if the purchase is deemed contrary to the public or local interest, or if negative elements emerge from the checks (entry ban, ongoing judicial proceedings…). In case of refusal, a legal appeal is possible within 30 days.

Mandatory lawyer and legal security

Regardless of the buyer’s nationality, the use of a Hungarian lawyer or notary is mandatory for drafting and countersigning the deed, a prerequisite for land registry registration. The lawyer checks the titles (ownership, mortgages, easements, debts) and often manages the escrow of funds.

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VAT rate applicable on legal fees in real estate acquisition

Main taxes and fees related to investment

The Hungarian tax regime is relatively straightforward for residential real estate.

Good to know:

Purchasing a property in Hungary is subject to a transfer tax (4% up to 1 billion HUF, then 2%, capped at 200 million HUF), with possible reductions. VAT is 27%, but a reduced rate of 5% applies to new homes under certain size conditions. Rental income is taxed at 15%, with the possibility of deductions. A 15% capital gains tax may apply on resale, but it is generally exempt after 5 years of ownership. Finally, municipalities levy an annual tax on buildings and land, with rates below the legal ceilings.

In Szombathely itself, there is no indication of a particular surtax as in some tourist areas of Lake Balaton. However, it is advisable to check the local rates before acquisition.

Possible investment strategies in Szombathely

Given the data on prices, yields, demographics, and infrastructure, several strategies emerge for an investor interested in this city.

1. Moderate-yield patrimonial investment

With gross yields around 3–3.5%, Szombathely does not position itself as a cash-flow rental paradise. However, the combination of:

– entry prices lower than the average for major Hungarian cities;

– national dynamic of price increases;

– massive infrastructure and energy transition projects;

makes it a prime candidate for a long-term capital appreciation strategy. The investor bets on gradual value growth driven by structural trends, rather than on immediate high income.

Typical properties for this strategy:

– 55 to 85 m² apartments near the historic center and transport axes;

– townhouses or small family homes in inner residential zones (high density, good accessibility);

– new or very well energy-renovated housing, to position for future demand.

2. Housing for industrial and logistics employees

The weight of the automotive sector, the existence of large industrial parks, improved connection to transport corridors, and recent labor shortages in certain trades create sustained demand for housing for workers, managers, and technicians.

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– medium-sized apartments in neighborhoods well connected to northern and peripheral industrial zones;

– terraced houses or small new complexes, particularly in sectors like Olad or Kámon, where several new houses and terraced houses are already offered between 51 and 92 M HUF for 56 to 132 m²;

– co-living solutions for young professionals or detached workers, especially in buildings offering 3 to 4 bedrooms.

A relevant investment might consist of targeting these new terraced houses or recent complexes near employment zones and renovated axes, with a clientele primarily local or cross-border (workers holding a job in Austria but residing in Szombathely).

3. Short-term niche and proximity tourism

The Airbnb market remains modest, but relatively uncompetitive, with only about twenty properties. The revenue figures for the best hosts show it’s possible to reach over $1,800 to $2,000 per month in the top segments, with occupancy rates of 60 to 70% for the top 10%.

The most suitable properties:

Types of Lodgings in Szombathely

Discover our selection of carefully chosen apartments for your stay in Szombathely, combining strategic location, comfort, and aesthetics.

Entire 1-2 bedroom apartments

Located in or near the city center, or close to major cultural events like the Savaria Historical Carnival, the Lamantin Jazz or Bartók festivals.

Capacity for 4 to 6 people

Lodgings suitable for groups or families, matching the most common and sought-after capacity on the local rental market.

Careful comfort and aesthetics

Cyril Jarnias

Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.

On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.

Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.

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