Budapest, the enchanting capital of Hungary, has long captivated visitors with its rich history, stunning architecture, and vibrant cultural scene. In recent years, it has also emerged as a beacon for real estate investors seeking high returns and long-term growth in one of Europe’s most dynamic markets. With a unique blend of affordability, robust rental demand, and a thriving tourism industry, Budapest’s real estate market in 2025 presents a rare opportunity for strategic investors. According to Empire Real Estate a leading real estate, a leading agency specializing in Budapest’s property market, now is an opportune moment to invest. “Budapest’s real estate market is at a pivotal juncture,” says Avi Brenner, CEO of Empire Real Estate. “With property prices still below Western European averages and a projected 10-15% price increase over the next three years, investors who act now can secure significant capital appreciation and stable rental yields.”
A Market Poised for Growth
Budapest’s real estate market has demonstrated remarkable resilience and growth, even amidst global economic fluctuations. In 2024, the city saw a 15% appreciation in second-hand property prices, with the average price of a used apartment reaching HUF 56.6 million (approximately €138,000), according to the Hungarian Central Statistical Office (KSH). The average price per square meter rose to HUF 1,100,00 (€2,740), marking a 165,000 forint increase from the previous year. New apartments commanded even higher premiums, with an average cost of HUF 79 million (€193,000) in 2024, up 11.1% from 2023. These figures underscore a steady upward trajectory in property values, driven by strong demand and limited supply.
Looking ahead, Empire Real Estate forecasts continued growth through 2028. “We anticipate a 10-15% annual increase in residential property prices in Budapest’s central districts over the next three years,” Brenner explains. “This is fueled by a combination of maturing government bonds injecting capital into the market, stabilizing inflation, and Budapest’s growing appeal as a global tourism and business hub.” The KSH reported a 21.44% year-on-year increase in residential property transactions in Budapest in 2024, with the city accounting for 26% of Hungary’s total housing sales. This surge in activity, coupled with a projected 20-30% increase in nationwide transactions in 2025, signals a vibrant market ripe for investment.
Why Budapest Stands Out
Budapest’s appeal as an investment destination lies in its unique combination of affordability, high rental yields, and economic stability. Compared to Western European capitals like Paris or London, where a single apartment can cost upwards of €1 million, Budapest offers properties at a fraction of the price. For instance, a 60-square-meter one-bedroom apartment in the city center averages €289,000, while a two-bedroom in District V can be acquired for around €840,000. “This affordability, paired with a 5.39% gross rental yield in Budapest—the highest among Hungarian cities—makes it a standout choice for investors,” Brenner notes.
The city’s tourism boom further enhances its investment potential. In 2024, Budapest welcomed a 23% increase in visitors compared to 2023, with 5.3 million tourists flocking to its historic sites, thermal baths, and vibrant nightlife. This surge has fueled demand for short-term rentals, with properties booked for an average of 274 nights per year and hosts earning approximately €18,000 annually. However, Brenner cautions investors to diversify their strategies: “While short-term rentals offer yields of 6.-9% in prime districts, long-term leases provide stability, especially with Budapest’s growing population of international students and professionals.”
Prime Locations for Investment
Budapest’s central districts, particularly Districts V, VI, VII, and XIII, remain the epicenter of investment activity. District V, home to landmarks like the Parliament and St. Stephen’s Basilica, commands the highest prices, with average square meter costs reaching HUF 1.73 million (€4,220). District VII, encompassing the vibrant Jewish Quarter, is gaining traction for its cultural appeal and proximity to attractions like the Great Synagogue. Properties here, such as a 74-square-meter two-bedroom apartment on Paulay Ede utca, are valued at approximately €280,000 and yield 5% net for long-term rentals, with potential for 6-8% in short-term markets.
District XIII, particularly the Marina-Part area along the Danube promenade, offers a compelling alternative. “The XIII District combines modern infrastructure with proximity to the city center, making it ideal for both residential and rental investments,” Brenner says. The area’s new developments, such as the Waterside Residence, boast AA+ energy efficiency and are projected to appreciate by over 20% by completion in Q4 2025. Meanwhile, emerging neighborhoods like Újlipótváros and Józsefváros are attracting attention for their high rental yields and affordability, driven by demand from students, expats, and young professionals.
Strategic Investment Opportunities
Empire Real Estate emphasizes the importance of strategic planning to maximize returns. The agency highlights three key investment approaches for 2025:
- Long-Term Rentals for Stability: With Budapest’s homeownership ratio exceeding 90%, the rental market remains tight, particularly in university-adjacent areas. A 14% increase in average monthly rents for small apartments in 2024 reflects strong demand, especially near universities, where over 100,000 students compete for limited housing. Long-term leases with reliable tenants, such as those in the properties near Jokai and Oktogon squares, offer steady income streams and minimal vacancy risks.
- Short-Term Rentals for High Yields: The city’s tourism surge makes short-term rentals highly lucrative, particularly in central districts. However, Brenner advises caution: “While Airbnb yields are attractive, potential regulatory changes could impact profitability. Investors should target properties in districts with fewer restrictions, like District XIII, and ensure compliance with local laws.”
- Renovation and Value-Add Projects: Older properties in Budapest’s historic districts offer significant potential for value appreciation through renovation. For example, converting a spacious apartment into a mini student hostel or multiple studio units can maximize yields, as demonstrated by projects in District VI near Király Street.
Forecast for 2025-2028
The outlook for Budapest’s real estate market over the next three years is optimistic, driven by several key factors. First, Hungary’s projected GDP growth of 3.4% in 2025 and 12.9% over the next five years signals a stable and expanding economy, boosting property demand. Second, government initiatives, such as the 5% VAT on new homes and the CSOK Plusz housing allowance, are expected to stimulate both buying and construction activity. Third, infrastructure developments, including new transit lines and urban renewal projects like the Zugló City Centre, will enhance the appeal of emerging districts.
However, investors must remain vigilant. Rising maintenance costs, projected to increase by 5% in 2025 due to inflation, and potential restrictions on short-term rentals could pose challenges. “A thorough understanding of local regulations and market dynamics is crucial,” Brenner advises. “Partnering with a trusted agency like Empire Real Estate ensures investors navigate these complexities and secure properties with strong growth potential.”
Why Now is the Right Time
The confluence of Budapest’s affordability, high rental yields, and projected price appreciation makes 2025 an ideal time to invest. The city’s real estate market is at a sweet spot: prices are rising but remain competitive compared to Western Europe, and demand for both long-term and short-term rentals is robust. With foreign buyers accounting for 9.1% of transactions in 2024—and 22% in inner Pest districts—the market’s international appeal is undeniable.
“Budapest offers a rare opportunity to enter a growing market at a relatively low cost,” Brenner concludes. “With prices expected to rise by 10-15% annually through 2028 and rental yields averaging 5.39%, investors who act now can lock in significant returns while enjoying the stability of a culturally rich and economically vibrant city.” Whether you’re seeking a historic apartment in the Jewish Quarter, a modern development along the Danube, or a renovated property on Király Street, Budapest’s real estate market beckons with promise.
For those ready to seize this opportunity, Empire Real Estate stands ready to guide investors through every step, from property selection to rental management. Contact us today to explore Budapest’s vibrant real estate landscape and secure your place in one of Europe’s most promising markets.
Sources: Empire Real Estate (www.empire -bp.com), Hungarian Central Statistical Office (KSH), Investropa, Global Property Guide
