Serbian real estate market growth seems unstoppable
Real estate prices in Serbia have increased steadily in recent years.
The average square meter of housing costs 30% more than before, while the value of the real estate market has increased from 100 million euros to 4.2 billion euros in one year. And that’s not all. Demand continues to grow and one wonders why real estate prices continue to rise and if there is a real estate “bubble” that will eventually burst?
The question is all the more topical since the increase in the price of the square meter of residential space in many cities can also be tracked on a monthly basis.
So, for example, the prices of apartments in the Belgrade municipalities of Voždovac, Novi Beograd and Mirijevo have increased by 5% since the beginning of the year. The average price of a square meter of residential space in Novi Sad does the same, while in Niš, in parts of the city, house prices have increased by 30% since December. In Kragujevac, prices stagnate, while in Pančevo. they have increased by up to 10% in the last five months.
While the “bubble” has long been predicted to burst, or rumored to be “monetary vicissitudes,” experts say house price growth is being influenced by realistic factors.
“Real estate prices in Serbia are dictated by the real estate market. In a situation where the supply of apartments and houses for sale is limited and there are many potential buyers, that is, the demand is high, it is usual that the price of goods in this case , real estate, is increasing, ”explains the director of the Nekretnine.rs website, Anita Pešić.
Of course, the simple law of supply and demand is not the only cause of rising prices, and there are several other factors that influence prices in the real estate market.
The most important factor in the growth of housing market prices is the interest rates on home loans. With lower interest rates, which are now still twice as low as 10 years ago, loans are getting cheaper. As a result, more people can buy real estate, resulting in higher prices. It is also true that more and more people are able to afford to own a property, which may be linked to a drop in unemployment, i.e. an increase in employment.
Investing in real estate is therefore not an unreasonable business decision for a bank, insurance company, investment fund, entrepreneur or someone who has decided to buy real estate in order to live there.
Serbia does not have a developed investment culture and there are no real opportunities in the financial markets. While in more developed countries savings are invested in stock exchanges, investment funds, etc., in Serbia this type of economic intervention is still in its infancy. In this context, buying an apartment for rent is a safer option than investing in an underdeveloped capital market or putting that money in a bank.
“In this part of the world, we are not used to investing in securities or precious metals, but we invest acquired or inherited capital in real estate,” explains Anita Pešić.
In addition, the real estate market in Serbia is full of “tied selling”. When the money is made by selling a larger apartment or piece of land, the sellers themselves usually decide right away to reinvest the money in the purchase of several smaller properties. This is one of the reasons why the Geodetic Authority report indicates that up to 84% of real estate transactions are paid in cash.
This article is also available in: Italiano