Is it worth buying a new or used apartment?

One of the biggest dilemmas before buying an apartment is whether it’s worth purchasing a new or used one. This decision is influenced by many factors. While there are many newly built apartments available nationwide, which can even be bought off the drawing board, there are areas where finding a new apartment is more challenging. Take the real estate market in downtown Budapest, for example. The availability of government support also varies depending on whether you’re purchasing a new or used apartment, though the contrast may not be as significant as we might initially think. It’s advisable to consider both options and weigh the pros and cons of new and used apartments.

Which Is More Expensive?

Whether the purchase is for investment purposes or to create a home, the price is one of the most dominant factors in the decision-making process.

Of course, to make a fair comparison between prices per square meter, several other factors need to be taken into account, such as:

• What condition is the used apartment in? Does it need renovation, and if so, to what extent, and how much investment is required?
• What is the infrastructure like around the new or used apartment? For those wanting to live in the city center, often the only available option is a used property, which will need renovation but offers the chance to live or rent out in the desired neighborhood.
• How energy-efficient is the apartment? New constructions meet current energy efficiency standards, whereas used apartments may require investment to improve their energy efficiency, and options in this regard are more limited.
• Is someone willing to undertake a renovation? If yes, a used apartment can be transformed into a unique living space, while a new apartment often comes with a fixed interior design.
• What are the conditions and interest rates for obtaining a mortgage for purchasing a new or used apartment, and what state subsidies are available and to what extent?
• How urgent is the move? A used apartment, if in move-in condition, can be occupied within 1-2 months, while a new build might require waiting up to a year from the signing of the purchase agreement to the move-in date.

There are locations or neighborhoods where we might not even be able to purchase a new apartment if we wanted to.

(Source: KSH – Housing Market Prices, Housing Price Index, Q1 2021)

According to KSH data, the housing market recovery that began in 2014 stagnated in 2019 and responded to the successive waves of the global pandemic with a decline in 2020. The price index for new and used apartments diverged: the price increase for new apartments continued at the same pace as before, while the price increase for used apartments slowed.

Comfort

Newly built apartments, when thoughtfully designed and constructed, tend to be more comfortable than used apartments. Most often, they come with a balcony or terrace, a garage or parking space, and a private storage area. In many cases, even a 2-3 bedroom apartment might have 2 bathrooms, providing significantly more comfort for a family or tenants. Some comfort-enhancing features, such as a large living room-kitchen-dining area or 2 bathrooms, can also be implemented during a renovation of a used apartment.

When purchasing a new apartment, it’s important to carefully review the contract to understand what technical content is included and what the turnkey apartment will actually consist of.

It’s essential that the buyer is not surprised to find that blinds or air conditioning are not included when it’s time to move in.

Energy Efficiency

New properties must comply with stricter energy efficiency standards. These standards are also becoming more demanding year by year.

For properties meeting the nearly zero-energy consumption (KNE) standard, renewable energy sources must account for at least 25%. The AA++, AA+, AA, and BB energy categories meet or exceed this requirement. In Hungary, the number of properties rated nearly zero energy (at least BB) is still low, but after June 30, 2022, new buildings meeting this standard can receive a certificate of occupancy.

Energy efficiency improvements can be made during the renovation of used apartments, but there are limits to what can be done in this regard.

Government Support (CSOK)

For those looking to buy a new or used apartment with the aim of establishing a home, it’s essential to explore the available government support options. The amount of this support can depend on the number of children and the type of housing goal. The CSOK amount can range from 600,000 HUF to 10 million HUF. A family with 3 children can receive 2.2 million HUF for a used apartment, while 10 million HUF for a new build. This creates a significant difference, with the new apartment receiving an additional 7.8 million HUF in support.

For a family with one child, there is no difference in the CSOK amount for a used or new apartment.

There is no distinction in exemption from duties, and the VAT content of the purchase price is only applicable for new apartments. The available CSOK loan and Baby Loan eligibility are not dependent on whether the apartment is new or used.

(Source: Bankmonitor – 2022.04.07)

Green Loan

The green loan is a great option for buyers and builders of new apartments, but it may also drive up the prices of used apartments. The green loan can be up to 70 million HUF, with a 25-year term, fixed at 2.5% interest.

It is available for purchasing or constructing new properties that are at least BB-rated or have a maximum primary energy demand of 90 kWh/m2/year.

KSH data shows that in the past decade, the average price of both used and newly built apartments has moved similarly. When the price of new apartments decreased, the price of used ones followed, and when the price increased, the reverse occurred.

Advantages and Disadvantages of Used Apartments

Purchasing a used apartment can be advantageous for the following reasons:

• They are cheaper than new buildings
• They can be fully customized during renovation
• They are ready for immediate occupancy, and in the best case, can be moved into right away
• Often negotiable prices
• In some areas, new apartments may be unavailable or limited, so the search has to focus on used properties

What could speak against it?

• Unexpected costs (e.g., old wiring, moldy walls – it’s important to consult with a real estate expert to avoid hidden expenses)
• A renovation requires significant work
• Energy efficiency or comfort improvements may not be possible

Advantages and Disadvantages of New Apartments

A new property has its advantages, such as:

• Many elements can still be customized (flooring, potentially even the interior layout) with timely contract signing
• No additional costs for technical upgrades if the specifications are appropriate
• New apartments are more energy-efficient and comfortable than used apartments
• The feeling that no one has used the space before

Disadvantages may include:

• High purchase price
• You have to wait, it’s not immediately available for move-in

What to Consider When Buying an Apartment

The first decision is where you want to buy. It’s worth walking around the street and neighborhood at different times of day to see how you feel about the area, its lighting, and atmosphere. Carefully consider your financial resources. Are you buying with your own savings, or will a loan be necessary? Can you take advantage of state support? Do you want a turnkey new apartment, with minimal work to be done, or would you prefer a cheaper used apartment in the area where you want to live or rent out? Don’t be intimidated by a renovation, as with thorough planning, you can turn a used apartment into a true gem. Many questions arise before buying an apartment, whether it’s a new or used property.

Careful consideration is essential for making a good decision. Kenway Real Estate’s philosophy is to provide high-quality services tailored to individual needs, whether for buying, renting, selling, or leasing new or used properties. Our team has considerable professional experience, enabling us to offer comprehensive and exclusive services.

Contact us today—at Kenway, you’ll find a professional partner.