Following the April low and fluctuations in early summer, rents have been declining on the supply side since August. As a result, rents in October were already lower than in April, roughly reaching the level of two years ago. Compared to the previous month, the decrease was more significant both nationally and in Budapest than in August – September. Dwellings for rent were offered at lower prices in all Budapest district groups, which was most noticeable in the hilly districts of Buda.
Further increasing 'Budapest predominance' in the supply of dwellings for rent
Significant metropolitan concentration, including a strong predominance of the capital, is characteristic of the territorial distribution of the data used. Budapest had a share of 62% in January – October 2020.
Average size of dwellings advertised for rent was 53m2 in Budapest and 57m2 in the county seats. Dwellings for rent in smaller settlements are usually larger, their average floor area was 66 m2 in January – October 2020. Pest County recorded the highest value in terms of floor area of rented dwellings.
Dwellings in multi-apartment buildings accounted for the vast majority of observed advertisements (94%) and the remaining 5.9% for detached houses.
In the first ten months of 2020, 46% of the advertisements surveyed came from individuals and 54% from intermediaries, with the latter having a higher proportion of 56% in Budapest. October saw a further slight increase in the proportion of real estate agency advertisers.
Rents in Budapest have been declining for the third month in a row
After market volatility observed in early summer, rents have been steadily declining nationwide since August, falling by 2.3% in October compared to the previous month. As a result, rental prices in October also fell short of the multi-month low in April (0.9%). In Budapest, there was a smaller difference, rents in October were 0.4% lower than in April, but there was a decrease of 2.4% compared to the previous month. In October 2020, the aggregate national index reached 130% of the 2015 value, 8.4% lower than in the same period of the previous year.
In October 2020, the index calculated on a 2015 basis was 124% in Budapest, which is 11.2% lower than in the same period last year.
In October, among the groups of districts in Budapest, rents fell the most in the hilly districts of Buda, by 5.2% compared to the previous month, while other districts of Buda were basically stagnant (-0.3%). Prices also decreased on the Pest side of the capital: in the inner districts of Pest by 2.4%, and in the transitional and outer districts by 2.2% and 1.3%, respectively.
Methodological notes
Budapest district groups to classify districts:
Buda, hilly districts: I, II, XII
Buda, other districts: III, XI, XXII
Pest, inner districts: V, VI, VII, VIII, IX
Pest, transitional districts: X, XIII, XIV, XIX, XX
Pest, outer districts: IV, XV, XVI, XVII, XVIII, XXI, XXIII
The ingatlan.com database makes it possible to identify multiple-advertisements, and this solves the most difficult problem for advertising databases, the bias caused by repeated advertisements.
Rent indices showing changes in home rental prices are determined by hedonic regression analysis performed on different subdivisions. A similar modelling technique was used for each sub-index and the range of variables involved was the same. All models cover the entire period. Data are available from May 2015. The 2015 data were considered as a control during the modelling, accordingly the calculated indices are included as the 2015 base index. Changes in rents over time – so the rent index itself – are derived from the coefficients of time-dummies formed per month. To monitor the composition effect, we used duly completed housing quality characteristics available in the advertising database, as well as the indicators included in the HCSO databases. The target variable, the floor area and the housing market price level characteristic of the settlement (part) were included in the models by logarithmization, and the categorical variables by transforming them into a dummy form.
By aggregating different sub-indices, covering all ads examined, multiple indices can be calculated. The present compilation uses an indicator calculated from regional sub-indices. The attached tables also include indicators calculated by advertiser stratification. A detailed methodological description is available in the publication "HCSO and ingatlan.com developed a rent index".
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