The real estate market in Serbia is facing major challenges - prices are reaching record highs, while high interest rates make buying even more difficult. On top of all that, inflation, which affects almost all aspects of the economy, further raises the cost of living and reduces the paying power of citizens. Although the demand for apartments is still high, many potential buyers are forced to postpone their purchase due to the aforementioned conditions.
Marija Đurić, a real estate agent from Belgrade, told Vreme that the decline in real estate turnover continued this year, as confirmed by the data of the Republic Geodetic Institute (RGZ). Nevertheless, interest in buying apartments remains high, despite the stagnation of traffic.
"Compared to 2022, when the market was extremely active, the decline in traffic continued this year as well. Nevertheless, interest in buying is still present, although high interest rates are the main reason many potential buyers delay their decision. They are waiting for more favorable conditions," Maria explains.
According to the latest reports of the National Bank of Serbia, the growth of inflation and interest rates led to a general decline in the creditworthiness of the population, which directly affects the reduced ability to purchase real estate. This trend further complicates the situation in the real estate market, where high demand is not accompanied by favorable financing conditions.
Marija also emphasizes that most sellers are not completely ready to lower prices, but that sometimes, faced with reduced demand, they still give in under pressure:
"Most sellers keep the price level of two years ago, while buyers are not willing to accept such high amounts." However, due to reduced interest, some sellers, after a certain time, decide to lower prices".
Interest in non-urban regions as well
When it comes to the most sought-after locations in Belgrade, our carpet expert points out that central city municipalities and those further away from the center are equally popular, provided they have good connections with other parts of the city. Interest in non-urban regions and mountains remains very current as many buyers are looking for properties outside urban areas.
"Interest in new construction is also still current, because there is the possibility of paying in installments and applying for a loan within the next year to a year and a half", says Marija Đurić.
Speaking about the structure of buyers, he notes that both domestic buyers and foreign citizens are represented: "Among the buyers we have a significant number of foreign citizens, but also our people, especially those who live abroad, show great interest in investing in real estate in Serbia. They often use these properties to rent out, which allows them to recoup their investment."
NBS lowered interest rates for loans
The real estate market in Serbia is currently balancing between high demand and unfavorable conditions for buying, but it has begun to react slowly under the pressure of reduced activity. The interest of both domestic and foreign buyers remains stable, which indicates that, despite the challenges, real estate still represents an attractive investment.
Loans in Serbia should soon be somewhat cheaper, after the National Bank of Serbia lowered the interest rate by 0.25 percentage points to 5.75 percent, and the European Central Bank to 3.5 percent.
Given that the key interest rate of the NBS refers to dinar loans, and the key rate of the ECB to loans in euros, a further decline in interest rates on loans to citizens and the economy can be expected.
Most housing loans in Serbia are indexed in euros and in their structure have Euribor, the interest rate on mutual loans of banks in euros. Euribor is precisely the path through which the reduction of the ECB's interest rate spills over into smaller loan installments for citizens.
