Apartment prices in Serbia experienced a slight increase, while the real estate market continued its trend of stagnation in the first quarter of 2024.
The report from the Republic Geodetic Authority shows a clear trend of slowing price growth for the sixth consecutive quarter, with key factors - high interest rates reducing the number of property purchases through housing loans, as well as a high inflation rate. However, despite the stagnation, the first quarter shows an increased level of buyer activity.
By analyzing the quarterly report from the RGA, we will illustrate the current conditions dominating the real estate market in Serbia.
Rising prices of new builds VS secondary market
Compared to the same period last year, apartment prices in Serbia have risen by 4.74%. Since the last quarter of 2023, the increase has been modest at 0.78%. This moderate quarterly increase indicates that the real estate market remains stable without significant fluctuations, which is a positive sign for the economy and investments.
The price per square meter has increased by 4.52% for old construction and by 5.09% for new construction on an annual basis. The average price of new construction is slightly higher compared to old construction, but purchasing apartments under construction has been the preferred choice for buyers for years.
“There are several reasons why new construction is more sought after. Sellers of used apartments in some parts of Belgrade are asking for as much money as new apartments cost. Renovations costs have gone up, people don't have time for it. There is another very important factor that directs buyers towards new construction, which is the VAT refund for first-time buyers,”commented Miloš Mitić, director of the City Expert company.
How many apartments were purchased?
From January to March 2024, 10,186 apartment purchase contracts were recorded, with a total value of 834 million euros.
The number of apartment sales in the first quarter of last year was 10,255, while in the fourth quarter of 2023 there was a significant year-on-year decrease of -19.8%, when the real estate transaction boom in the post-pandemic period subsided. New data indicate stabilization in demand for real estate compared to the most recent period at the end of last year.
Fewer credit buyers causing stagnation
What has been noticed over the past few quarters is a decrease in real estate market activity, primarily due to unattractive conditions for housing loans, namely high interest rates. Since Serbia is a market of related purchases, meaning that most real estate is purchased with funds from the sale of other real estate, less buyer interest in loans significantly slows down transactions.
From the report, we see that the number of apartments purchased with loans decreased by 3.39% annually, but if we look at the last quarter of last year, we notice the largest drop of 36.08%. Considering only the first quarter of the current year, 18% of buyers financed their real estate purchases through loans.
The dynamic of apartment prices across Serbia
Regarding specific regions, the report shows that apartment prices rose by 5.00% in Vojvodina, 4.50% in Belgrade, and 3.49% in Šumadija and Western Serbia. The highest increase was recorded in the region of Southern and Eastern Serbia at 7.16%.
If we pair data from the RGI report with our company's extensive database, it is definitely noticeable that, although we are still in a period of market stagnation, there are clear signs of mild recovery with a tendency for further market activation in the coming period. What we can conclude from the volume of construction activity is that new buildings are expanding, with many new projects announced in Belgrade, so we do not expect any negative changes. Additionally, the upcoming EXPO exhibition will further intensify activity in the market.
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