Hungary is seldom at the top of the destination shortlist for expats looking to make a move to Europe, however, the country that is often referred to as the hidden gem of Europe, has lots to offer both in terms of lifestyle and business opportunities.
Hungary has a rich cultural heritage. Its location on the crossroads between the Western and the Eastern Europe has contributed to a wide diversity. Its capital, Budapest, however is a typical European city with plenty of cultural attractions and a busy nightlife.
Up-and-coming Budapest
Mercer Cost of Living Survey for 2016 places Budapest in position 165 out of 209 cities, which indicates that cost of living for expats in Budapest is going to be significantly lower than in most European capitals.
Last year Budapest achieved the rank of 170th – so cost of living is creeping up slowly but steadily. When looking at a cost-weighed quality of living, Budapest moves to a highly respectable 30th position reinforcing its image as a great place to live and work.
Unlike the more established economy of nearby Vienna, cost of living in Budapest is still a nice surprise for most expats. For quality of living that the city offers, the prices are tangibly cheaper.
Expatistan’s Cost of Living Index suggests that cost of living in London is 152% more expensive than in Budapest, while Vienna is 60% more expensive than Budapest. The main areas of divergence are cost of food, transportation and lifestyle. A loaf of bread can cost as little as 40p while a pint of local ale – 70p.
On the other hand, accommodation might be a slight concern for expats who want to live near the centre of Budapest or in other premium areas of the capital. Rents have been on a rise and you can expect to pay £600 per month for a high-spec 2-bedroom apartment. It’s not unusual to pay 50% of your monthly income towards rent.
Economic climate in Hungary
Another potential downside to moving to Budapest is taxes. Even those on a basic salary are paying 35% in income tax. The tax was hiked following the austerity measures of the early 2000s as the country was still reeling after the damage it suffered under Soviet rule. Good news for expats, though, is that they can demand a higher pay rate because niche specialists are still in high demand in Hungary.
Hungary is one of the few EU countries yet to adopt the euro currency. Although the government had made plans to join the euro zone by 2009, financial crisis in Hungary made this impossible. The Hungarian government hasn’t managed to fulfil all requirements (inflation, budget deficit, public debt and interest rate) for joining the euro narrowly missing the most recent deadline in 2014.
This uncertainty has affected stability of Hungarian economy with retail prices and interest rates fluctuating. There have been no further deadlines set, however, it is known that the government is aiming to adopt euro by early 2020s.
When they do, prices are bound to increase. On a more positive side, this move is likely to increase the amount of external investment by 30%, which will balance out the negative effects and help Hungary reach a prosperity level on par with Austria and other neighbours.
So, this might be a good moment to invest in Hungarian real estate as house prices will inevitably increase with introduction of the euro currency. Property sales fell twofold during the most recent recession that officially ended in 2013. Now the property market is on a steady rise with prices up by 20% compared to 2014.
Having said that, there are bargains to be had – you can still find a centre apartment for under 100,000 EUR, which is extraordinary for most European capitals. Considering rental prices are disproportionally high in Budapest, buying a property might be a good move for expats who are looking to settle in Hungary on a long-term basis.
Information and prices correct at time of publication