The Changing Dynamics of Budapest’s Real Estate Market — Why Now Is a Strategic Moment to Invest

Budapest’s real estate market is standing at a turning point in late 2025. With sweeping new regulations on short-term rentals, especially in the central Terézváros (District VI) the landscape for investors and residents is shifting. In this post, I’ll walk you through the new regulatory environment, how it may positively reshape the housing market, why now may be a particularly good time to invest, and what the medium-term (next 4 years) outlook might look like.

What’s Changing: New Short-Term Rental Restrictions in Budapest

• In a referendum held in 2024, the majority of residents in Terézváros voted to ban short-term rentals (e.g. via Airbnb or similar) within the district starting January 1, 2026.

• The regulation (adopted under decree 26/2024 X.31.) sets the annual allowable rental days for private short-term rentals to zero.

• Additional nationwide measures aimed at the capital include a moratorium on issuing new short-term rental licences (2025–2026) and a sharp increase in the flat-rate annual tax per room (from HUF 38,400 to HUF 150,000).

• The rationale: concerns over a housing shortage, steeply rising rents, and displacement of long-term residents due to the surge in tourist-style rentals.

  
  

In sum, Terézváros is the first district to implement a full ban, but the capital’s broader regulatory environment is becoming increasingly unfriendly to short-term rentals.

Why These Changes Could Positively Impact the Real Estate Market (Long-Term)

- More supply for long-term rentals

Properties previously used as tourist rentals are likely to shift to the long-term rental market. This will increase the pool of available rentals — especially in inner-city districts — helping to ease housing pressure. Some analyses expect a 5–15% drop in rent for smaller (30–55 m²) renovated apartments in District VI soon after the ban.

- Stabilization of prices and rents around fundamentals

Short-term rental-driven volatility (price spikes, gentrification, etc.) may ease. As demand shifts toward longer-term residents (families, workers, students), housing prices and rents may stabilize based on underlying economic fundamentals — wages, demographic trends, interest rates — rather than tourist-driven speculation.

- Return of residential character and community comfort

The regulation aims to bring back a sense of permanence and community in central neighbourhoods. For many residents, this means more stable neighbourhoods, less transient population, fewer disturbances, and a better living environment — which can make central Budapest an attractive place for long-term living and thus for long-term investors.

- Clearer regulatory environment => lower regulatory risk (compared to unregulated short-term rentals)

With the laws clarified and the ban confirmed by the highest court (Supreme Court has upheld the District VI ban), investors now have more legal certainty about what is allowed — reducing the risk of sudden crackdowns or unregulated private rentals.

Why Investing Now Could Be Smart — Especially in Central or Inner-City Districts

• Pre-ban transition period (until end of 2025):

  This window may still allow you to acquire properties previously rented as short-term accommodation — possibly at lower valuations as sellers reassess the attractiveness of tourist-rental-based yields.

  
  

• Potential demand surge for long-term rentals:

  As former short-term rental apartments move to the long-term market, demand from locals — students, young professionals, families — may rise. That can lead to stable, long-term rental yields.

  
  

• Moderation of price volatility:

  Shifting from tourist-driven bubbles to more stable, resident-driven demand may reduce wild swings and make real estate a safer, longer-term play.

  
  

• Urban regeneration and livability focus:

  As neighbourhoods become more resident-friendly, quality-of-life improvements may attract more buyers or tenants looking for stable homes, which could raise property values over 3–4 years.

  
  

Especially if you’re planning to hold for several years (rather than flip quickly), or prefer stability over short-term income, now offers a strategic entry point.

Market Predictions: What Could Happen Over the Next 4 Years (2026–2030)

Time horizon	Likely trend / scenario
2026 (short-term impact)	Rents for small, centrally located apartments may drop 5–15%; prices for “tourist-style” properties may see a modest 5% correction in District VI.
2026–2027	Supply of long-term rental properties rises; demand grows among students, young workers, families — especially as central living becomes more accessible and attractive.
2027–2029	As the market stabilizes, housing prices and rents gradually rise again, this time based on real demand, inflation, and economic growth (rather than tourism spikes).
2030 and beyond	If more districts follow District VI’s example, the capital may shift toward a balanced housing market: stable long-term rentals, improved livability, more sustainable growth. Strong potential for good long-term yields for buy-and-hold investors.

That said, much depends on broader economic factors — inflation, interest rates, demographic trends — and whether other districts adopt similar bans.

Risks & What to Watch Out For

• Legal / political risk —

  While District VI’s ban is now upheld, debates continue; if regulations change or weaken, the rental landscape could shift again.

  
  

• Short-term rental income no longer viable —

  If you bought with the intention of Airbnb-style yields, those returns will dry up at least in District VI.

  
  

• Oversupply risk in long-term rental segment —

  If many former short-term rentals flood the long-term market, supply could exceed demand in certain segments, depressing rents.

  
  

• Economic uncertainty —

  Broader macroeconomic factors may influence housing demand and prices; a stable legal environment helps, but economic downturns or interest-rate spikes remain a risk.

  
  

Conclusion, Budapest Real Estate: A Market in Transition with Real Opportunity

The new restrictions on short-term rentals mark a structural shift for Budapest, especially in central districts. What may look like a setback for short-term-rental investors could actually be a golden opportunity for long-term, buy-and-hold investors seeking more stability and predictable returns.

If you invest now — before the 2026 ban takes full effect — you may secure properties at relatively favorable terms, ride the transition to long-term rental demand, and benefit from a more balanced housing market over the coming years.