Given the high percentage of real estate purchased for cash, recommendations for reducing the share on credit and high demand, there is no prospect that apartment prices will fall… on the contrary.
The previous year was a big test for the real estate market. The coronavirus pandemic greatly affected the market – the sale of real estate almost stopped during the state of emergency, and in the field of issuance, it had the greatest impact on price fluctuations.
If we talk about the volume of the real estate market, in the first half of 2020, compared to the first half of 2019, real estate turnover fell by 14%, according to the data of the Republic Geodetic Authority. This was most felt during March and April. In March 2020, compared to March 2019, the number of sales contracts decreased by 25%, and if we compare April 2020 and April 2019, we see that this figure is even higher – the number of sales contracts fell by as much as 78%.
However, in the second half of last year, the market itself recovered very quickly and returned to the period before the pandemic – both in terms of the number of realized sales contracts, but also in terms of real estate prices. We could say that many were surprised by this market flexibility.
Despite everything, apartment prices – rose
And while many buyers hoped that real estate prices would fall and that the multi-year trend of rising prices would come to an end, that did not happen. On the contrary, real estate prices have already started to return to the period before the state of emergency since the second quarter, ie since May, and then, in relation to the first quarter of 2020 – to grow.
Average prices of advertised apartments in old buildings, in Belgrade, according to the portal for the sale of real estate 4zida.rs in the fourth quarter of 2019 it was 1,545 euros / m2, in the first quarter of 2020 1,511 euros / m2, in the second 1,647 euros / m2, in the third quarter 1,701 euros / m2, and in the fourth as much as 1,733 euros / m2. And we see that the apartments are in an old building in Belgrade on average by almost 190 euros / m2 were more expensive at the end of last year than at the end of 2019.
Apartments in Belgrade were almost 190 euros / m2 more expensive at the end of last year than at the end of 2019.
U Novi Sad, interestingly, the average prices of advertised apartments in old buildings did not fall even in the first quarter of last year. According to 4zida.rs, they have had a tendency since the middle of 2017 stable growth. For comparison, the average price of advertised apartments in old buildings in Novi Sad in the fourth quarter of 2019 was 1,339 euros / m2, and in the fourth quarter of 2020 as much as 1,492 euros / m2, which is price increase of over 150 euros / m2.
U Subotica is similar to Novi Sad – prices in old buildings are continued to grow even during the months of the state of emergency, keeping the multi – year trend of rising apartment prices active. If we compare the last quarter of 2019 and the last quarter of 2020, we see that the average price of advertised apartments in old buildings higher by almost 100 euros / m2 (750 evra/m2 vs 657 evra/m2)
The issue hit “apartment of the day” the hardest
The issuance market felt greater price fluctuations. During the state of emergency, real estate prices dropped more for rent than for sale. However, there was no drastic reduction in prices when it came to publishing, especially not so that we could talk about a trend. As with the sale, after the state of emergency, the demand for rental real estate returned to the period from the beginning of the year.
We could say that the biggest blow was felt by the owners who rent out their real estate on the principle of “apartment for a day”. Many of them also decided to replace short-term real estate rentals with monthly rent, and in the second and third quarters of 2020, a larger number of real estate for rent appeared on the market, especially those in Belgrade and Novi Sad.
Unprecedented demand for cottages
In the previous year, the demand for cottages increased drastically. In the first six months of 2020, it was even achieved 40% more sales contracts than for the same period in 2019. Most cottages were sold in Vojvodina.
What does 2021 bring us?
According to the data in 2021, we already see that this will be the year with a record number of building permits issued. Real estate prices in new construction have almost not dropped, so we can expect that they will this year as well continue to grow. Also, we can expect that they will affect the price of apartments in the old building, especially in places where exclusive new construction projects will be built, which will raise the price in the surrounding neighborhoods.
In the previous year, the National Bank of Serbia adopted measures that, among other things, supported the new construction. The most important measure concerns permits for housing loans for facilities that are built 60 percent (Until now, it has been the practice to approve housing loans with facilities that are 80 percent built). This rule applies to projects that are built within the project financing of the bank.
The National Bank of Serbia has made a recommendation to reduce the amount of mandatory participation for a housing loan from 20 to 10 percent.
The National Bank of Serbia also made a recommendation to reduce the amount of mandatory participation for a housing loan from 20 to 10 percent. This recommendation has so far been accepted by two banks.
In the first half of 2020, compared to the first half of 2019, the share of real estate purchases through housing loans increased by 2% and is now around 32%. The highest percentage of real estate, about 70% is still bought for cash.
Real estate price growth trend
Given such a high percentage of real estate that is bought for cash, we can conclude that the real estate market will be in largely stable. A large number of building permits points to a clear plan of investors, and consequently to a clear trend in the price of apartments in new construction.
Based on these indicators, but also on the basis of price movements in previous years, 4zida.rs concludes that it will real estate price growth trend continue, especially while prices are mostly affected by the law of supply and demand.
When you are already here…
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