Real estate prices in Serbia: Why are there no buyers and are the announced amounts realistic?

Sellers do not reduce astronomical prices, and buyers complain that they do not want to buy apartments that cost as much as in Vienna or any other European capital. Here is a brief description of the situation on the Serbian real estate market.

Experts say: “Stagnation - the situation will improve by spring”. Recall, according to the Republican Surveyor's Institute report for the first half of 2023, the real estate market continued its trend of stabilization and calming down after two years of dynamic growth that followed the outbreak of the coronavirus pandemic.

It is also noted that the average price of new buildings in Serbia in the first half of this year was 214,017 dinars per square meter, which means a decrease of 1.8 percent compared to the second half of 2022. Statistics show that apartment prices in the period under review ranged from 52,481 dinars in Bujunovac to 489,634 dinars per square meter in Belgrade's Savski Venac district.

As announced on the WGI website, the highest prices for new buildings were recorded in Belgrade districts, where the average price in urban areas decreased by 0.6 percent compared to the second half of 2022 and amounted to 314,955 dinars per square meter. In addition to Belgrade districts, Novi Sad, Chajetina, the median neighborhood of Niš, Vrnjačka Banja and Sokobaњa stand out with high prices.

According to statistics, the average area of new buildings sold was 55 square meters.

Sellers don't lower prices

Predrag Devic from the agency “Beoagent” says for N1 that there is a noticeable big lull in the real estate market in the capital. “There are very few transactions. Those who are selling are still trying to get higher prices, but everything is standing. There are no buyers. In addition, loans have gone up in price and we are coming to a situation where those who want to sell have to lower the price. It's a standard situation. I've been in real estate for 30 years, prices go up - up - up, but when they go down, there has to be a lull period like there is now. Sellers have to realize they can no longer get a great price. We can't raise and lower prices like a store,” he emphasizes.

He explains that the protracted condition in the market is also affected by bank loans, which have gone up in price, and notes that “it's rare to take out a mortgage at these interest rates.” When asked how long the protracted situation in our buy-to-let market lasts, and whether it can last a year, he replies: “No. A protraction can't last a year. It's terms of three, four or five months. By spring, things will settle down. At some point somebody has to try something. It's kind of a game of nerves between sellers and buyers.”

The prices aren't real in the ads

Commenting on the trend of falling real estate prices in the countries of the European Union, he noted that such trends are slightly “spilling over” into our country. “We are unique. We have everything late. That is why our prices are standing now, while they should be falling. When it starts in their country, it takes six months or a year to reach us. In principle, the prices were not even real. They were high in Belgrade. But they will fall by spring. To emphasize, they won't be the same as they were before the spike, but they will definitely fall. And no one can say by how much. The market will determine that,” points out Devic.

Speaking about the prices quoted in the ads, he emphasizes that they are not informative. “Often people call me because of the prices in the ads, but those prices are not real. In the ads, people we in real estate call - 'want to sell the apartment but don't want to sell'. Emphasis on - don't want to. We can sell something, but if we want to sell, we have to set a price that matches the real value in the market.

Our market is not comparable to the EU markets

Real estate appraiser MilicвЂokovic notes for N1 that our market is incomparable to real estate markets in European Union countries. “We are not comparable in many things, and especially in real estate. We don't have a mortgage market. We have only seven percent according to the latest RGI report is bought on credit. These are properties with mortgages. And they are the only ones that could theoretically be sold at auction. And the remaining 93 percent are not. In the world on the contrary, people mostly buy on credit, and that is why we are not comparable to the markets of EU countries,” says Ђokovic.

He says there has been a lull in the last three months and not many people have been buying, but reminds that this is normal for summer. He recalls that there was a “boom” in the market during the Corona, and record numbers were buying then. “Everyone makes the mistake of comparing this year to past years, but they are not comparable. The crown year was abnormal, there was buying then, it was like we were 'starving' for real estate. I don't know if the crown affected brains and people were frantic, but there was indeed an unusual amount of buying. So it's not comparable. Now we are back to normal, as much as it is possible to say we are normal, and prices have become stable. They are only rising in line with euro inflation. In some places there is an increase of one to five percent, while in others there is a decrease of up to five percent,” says Ђokovic.

There is less trade and less money in circulation, he says, and he explains that we are a “tied deal” market, meaning that 85 percent of apartment sellers do this and buy the property immediately afterward. “Because of that, they don't lower the price because if they lower the price of their property - they can't buy anything after that. This is another factor why there is no price reduction in our market,” explains the N1 interlocutor.

Ђokovic predicts a calming of the market and emphasizes that this could be influenced by Eurobor, which is estimated to “come to normal by the middle of next year,” also contributing to lower prices in the market.

Belgrade is the most expensive, Subotica is the most affordable.

According to data from the specialized real estate website “4 zida”, the current announced average price for apartments in new buildings in Belgrade is 2,496 euros per square meter, while the price for old buildings is 2,515 euros. In Novi Sad, the average price for old buildings is 2,247 euros, while the average price for new buildings is 2,175 euros per square meter. In Kragujevac the prices are much lower, the average price for an old building is 1,292 euros and for a new building - 1,497 euros. In Nisu, the price for an old building is 1,536 euros, and for a new building - 1,751 euros. The lowest prices among major cities are in Subotica, where the current announced average price for an old building is 1,181 euros, while for a new building it is 1,507 euros.

“Average advertised prices of apartments for sale are stabilizing and slightly decreasing in the second and third quarters in most cities in Serbia. As for renting apartments in Belgrade, the average advertised prices on our website were at the same level in the first two quarters of this year, but there was a slight increase in the third quarter. Thus, the average rental price for a garsonerka in Belgrade in the third quarter increased from 300 euros, which was the average price in the first two quarters of this year, to 330 euros, but now the average advertised price for a garsonerka is again slightly decreasing and is 285 euros. A similar trend is observed in other types of apartments”, said Aleksandra Mihailović, PR manager of the portal ‘4 zyda’.

Thus, in Belgrade, the average rent price for a garsonerka is 285 euros, for a one-room apartment 363 euros, and for a two-room apartment 672 euros. In Novi Sad, the average rent for a garsonerka is 252 euros, for a one-bedroom apartment - 279 euros, and according to “4 zid” for a two-bedroom apartment requires 447 euros. In Kragujevac, the price for a garsonerka is 149 euros, for a one-bedroom apartment 186 euros and for a two-bedroom apartment 234 euros. The most affordable cities for rent are Niš and Subotica. In Niš, the average price for a garsonerka is 209 euros and for a one-bedroom apartment - 240,