This 260-sq m house built six years ago on the Tihany peninsula of Lake Balaton is about 130 kilometres southwest of Budapest. Its style is traditional; though the brick, local volcanic stone and other materials used in construction are new, many details were designed to look antique, like the exposed timber beams. The main floor has a large entryway, which also functions as a dining area. The kitchen, off the dining area, has wooden cabinets, a granite sink, a ceramic tile backsplash and a dishwasher.

The living room has exposed beams and a tile stove, as well as access to a 20-sq m terrace with views of Inner Lake, a smaller lake on the peninsula that is a popular fishing spot. This floor also has a bedroom, a bath and a separate dressing area.

Of the four bedrooms up­stairs, one is being used as an additional living room; the rooms on that floor share one bath. The basement has a bedroom, a bath and a kitchenette, as well as a fitness room and storage. The house has radiant underfloor heating as a complement to its central heating system. The price includes all furnishings, many of them antique Biedermeier pieces.

There is also a vegetable garden and a small decorative pond. A garage, partially und­erground, has room for one car. Lake Balaton and its beaches are almost a kilometre away. Shopping and dining are a 10-minute walk. The local airport, Fly Balaton Airport, is about about 70 kilometres and Budapest Airport is about 150 kilometres.

Market overview

The property market in the Lake Balaton region is fairly static, said Christian Torok, managing director at Canella CE, a real estate agency based in Keszthely, on the western shore of the lake.

Asking prices around the lake vary widely according to size, condition and location, he said. The average cost of a low-end 80-sq m house in need of fixing up is $50,000 to $75,000. A high-end property close to the lake ranges from $250,000 to $400,000. Though forints are more widely used, many properties aimed at foreigners are priced either in euros or pounds sterling. There is room for negotiation on price, according to Torok, who says final sale prices these days are 10 to 15 per cent below asking price.

Demand remains healthy for “really upmarket” projects with lake frontage, said Gabor Borbely, a senior analyst at CB Richard Ellis Hungary, a real estate research and consulting firm. Property prices in the area first rose in 2004 as Europeans investors—Ge­rmans in particular—bought property in anticipation of the market’s going up once Hungary joined the EU.

Lake Balaton’s market remained flat until about 2007, when a new regional airport opened a direct connection to London and a whole new market. During those years, prices around the lake increased, sharply in some instances. Some of the most desirable homes, like those on the lake in Tihany, Torok said. The year-to-year increase at the higher end during this period was 10 to 15 per cent, he said, adding that annual increases at the lower end of the market exceeded 6 per cent.

By 2008, however, the global financial crisis had hit Hungary. “It was very much visible in the property market,” Borbely said. Real estate transactions ground to a halt and financing was virtually unavailable. At present, “it’s not a liquid market,” he added.

Who buys

The majority of foreign buyers are from Germany, Austria, Switzerland and the Net­herlands and, until recently, England, Torok said. There has been recent interest among Russian buyers, too, said Laszlo Kozma, a manager at Capital99 Real Estate in Keszthely. Most foreign buyers prefer homes on the hillier shore of the lake, closer to the local airport.

Buying basics

There are no buying restrictions for EU citizens; other foreign buyers must apply for permission from the government. The process is relatively straightforward and takes about six weeks, Torok said; the fee is $250.

The use of a lawyer is required by law. Fees typically range from 1 to 1.5 per cent of the purchase price; there is also a 25 per cent value-added tax on the fee, Torok said. Stamp duty varies according to whether a property is considered a residence or a holiday home. Residential homes carry a stamp duty of 2 per cent on any amount up to $20,000 and 4 per cent on any amount beyond, he said; holiday homes are subject to a straight 4 per cent stamp duty.

Though Hungary’s mortgage market is rebounding, most foreign buyers pay in cash, Borbely said.

Taxes and fees

Municipal taxes are about $500 a year.

— International Herald Tribune