House Hunting in ... Hungary

280,000 EUROS ($355,000)

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-square-meter (213-square-foot) 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.

The house has 670 square meters (7,213 square feet) of property; the garden has mature trees and is equipped with a Jacuzzi. 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 kilometer away (about a half mile). Shopping and dining are a 10-minute walk. The local airport, Fly Balaton Airport, is about about 70 kilometers (40 miles) and Budapest Airport is about 150 kilometers (90 miles).

MARKET OVERVIEW

The property market in the Lake Balaton region is fairly static, said Christian Torok, managing director at Canella CE Ltd., 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-square-meter (860-square-foot) house in need of fixing up is 10 million to 15 million forints ($50,000 to $75,000). A high-end property close to the lake ranges from 50 million to 80 million forints ($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 Mr. Torok, who says final sale prices these days are 10 to 15 percent 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. Developers who hatched plans during the housing boom for large-scale projects are forging ahead with smaller plans aimed at this higher segment of the market, he said.

Property prices in the area first rosein 2004 as Europeans investors — Germans in particular — bought property in anticipation of the market’s going up once Hungary joined the European Union.

The spike never happened. “There were too many properties on the market at the same time,” Mr. Torok said. 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, the site of this home, doubled in value, Mr. Torok said. The year-to-year increase at the higher end during this period was 10 to 15 percent, he said, adding that annual increases at the lower end of the market exceeded 6 percent.

By 2008, however, the global financial crisis had hit Hungary. “It was very much visible in the property market,” Mr. 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 AT LAKE BALATON

The majority of foreign buyers are from Germany, Austria, Switzerland and the Netherlands and, until recently, England, Mr. 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, northern shore of the lake, which is closer to the local airport, while weekenders from Budapest prefer the more easily reached and family-friendly south shore, Mr. Borbely said.

BUYING BASICS

There are no buying restrictions for European Union citizens; other foreign buyers must apply for permission from the government. The process is relatively straightforward and takes about six weeks, Mr. Torok said; the fee is 50,000 forints ($250).

The use of a lawyer is required by law. Fees typically range from 1 to 1.5 percent of the purchase price; there is also a 25 percent value-added tax on the fee, Mr. Torok said. Stamp duty varies according to whether a property is considered a “residence” or a “holiday home,” an officially determined classification that doesn’t necessarily reflect how the home is used. (A seasonal home without heating, for example, would typically be classified as a holiday home, he said.) Residential homes carry a stamp duty of 2 percent on any amount up to 4 million forints ($20,000) and 4 percent on any amount beyond, he said; holiday homes are subject to a straight 4 percent stamp duty.

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