For Budapest, Prague and Sofia, Brownfield Sites Are No Cure for Housing Blues

Huge projects are due to deliver new neighbourhoods in Prague. Photo: Central Group Priced out

In the Hungarian capital, buyers need more than 16 average annual salaries to buy a 75 square metre (m2) apartment. This means that if you start working at 23 and miraculously don't spend on anything else, at 40 you can own a home. This trend accelerated especially from 2015 on.

With tight labour markets, high wages growth and low interest rates, prices have been expanding rapidly over the past eight years, sparking an increasingly severe crisis in Budapest, Prague and Sofia, with the Central European cities hardest hit.

In Prague, the average price of a new apartment had surged to over CZK150,000 (6,330 euros) per m2 by June 2023, roughly on a par with Vienna. In Budapest the average price sat at 1,500,000 forints (4,200 euros) per m2. Bulgarian website imoti.bg puts the average price at 1,272 euros per m2.

An increased supply of new apartments delivered by the large metropolitan building projects scattered around these capitals could help to ease the pressure on home seekers a little, experts suggest. But not by much - and even then, only if they're affordable.

There is concern that many of the flats due to be delivered on these brownfield sites will price out local buyers, and extend the recent trend that has seen wealthier, often foreign buyers snap up multiple units in a speculative bet on rising property prices.

In Budapest, in the first quarter of 2023, four out of ten buyers purchased for investment purposes, according to a housing report published by the Hungarian National Bank.

Heavy tourism, cheap mortgages and huge capital gains have also helped turn housing in Prague into a popular investment product. A...