Characteristics of land market in Hungary at the time of the EU accession

Abstract

The Agricultural Economics Research Institute has launched a research project with the aim to analyse the Hungarian land market and the changes occurred since the EU accession as well as to present the tendencies of the development. The statistical data on the land market is rather deficient and cannot be considered representative, therefore, we also included some empirical experiments summarising experts’ opinion referring to all the counties of Hungary. In our paper, we provide our statements and conclusions. The survey shows that the landed property market in Hungary is in a state of anticipation. Demand is primarily for outstanding and good quality land of favourable location in certain countries or larger plots of arable and forestry land. Characteristically, the poorer quality, less accessible land of less favourable location in the neighbourhood of the depopulated, cul-de-sac villages is in oversupply. Scattered, wedged properties of small size or of unclear ownership (undivided common land) are difficult to sell. Many of the vendors are older people with subsistence worries or people who obtained the title by compensation but do not wish to get involved in cultivation. Increasingly more buyers are well capitalised farmers, who wish to increase their holdings, or to unite their property (by land swap). Another significant group of buyers wish to invest into landed property located in the neighbourhood of larger cities, at popular sites, next to main roads or motorways. According to our survey, in the immediate years before the EU accession land and lease prices increased significantly, many fold in relation to quality. Increases in land prices are due to a process of convergence to the EU prices intending to take advantage of the projected unified land market. Increases in lease prices are due to apportioning of the projected land based support between owner and lease holder. According to land sale experts (estate or realty agents) the land market will in the 5−10 years liven up resulting in increases in land and lease prices, although the extent of this cannot yet be prognosticated.