"Foreigners don't ask about the price of real estate: How much have apartment prices grown in Montenegro?"?"

Prices for residential real estate in Montenegro continue to rise, despite a decrease in the prices of construction materials on the international market, while the European Central Bank (ECB) warns of a "chaotic decline" in housing prices in the eurozone.

The reason for the rise in apartment prices, despite the decrease in construction material costs and the opposite trend in Europe, is the significant increase in interest from foreigners in recent months, who "do not ask about the price." More than 80,000 foreigners have officially arrived in Montenegro, mainly from Russia, Ukraine, and Turkey, who are significantly wealthier than the average Montenegrin citizen. They already make up 15% of the population and want to purchase real estate. Our apartment prices are very low for them, which is why they are investing substantial amounts of money in their purchases. Currently, it is impossible to find an apartment in Podgorica for less than 1,700 euros per square meter, and in the best locations, the price significantly exceeds two thousand, as reported by a source from "Vesti."

The Monstat report for June indicated that the average price per square meter in new buildings in Podgorica was 1580 euros. - During the summer and now, there has been a significant new increase in prices, so the average figure for the third quarter will exceed 1700 euros per square meter. We have examples of successful sales to foreigners for 2800 euros per square meter on plots near Moraca, where the foundations of the building have just been laid, the source told the newspaper. When asked how long the price increase would continue, he replied that as long as there is interest from foreigners to buy at such prices, it will persist. - Even a few thousand wealthy foreigners can significantly drive up real estate prices in the long term because our entire construction industry in Montenegro can build no more than three to four thousand apartments a year, while the interest from foreigners currently exceeds this number. Prices for construction materials rose sharply last year, and now they are decreasing. Regardless of this, prices will remain high as long as there are buyers for them, the source said.

At the beginning of 2019, the average price per square meter of an apartment in Podgorica in commercial sales was 1,209 euros, according to Monstat data. At this price, a 50-square-meter apartment cost 60,000 euros. At that time, according to the Central Bank, the average effective interest rate on mortgage loans was 4.53%. This meant that the total debt on the loan to be repaid over 20 years was 91,000 euros, with a monthly payment of 382 euros.

The increase in ECB interest rates will raise housing prices. On Thursday, the ECB raised the base interest rate again, which will also affect a new rise in rates in Montenegro. They also stated that this is the last increase in an attempt to curb inflation. The rise in rates has reduced consumption and investment, which has further impacted the decline of the economy. According to Eurostat, seven EU countries, including the largest European economy, Germany, are on the brink of recession, and the decline of the European economy will be known by the end of this month. In June, the ECB warned of a significant drop in housing prices in the eurozone, which could have negative consequences for banks with a high percentage of mortgage loans. - Looking to the future, the decline in housing prices could become chaotic, as rising interest rates on new mortgages increasingly threaten their affordability and increase the burden of interest on existing mortgages - the ECB warned at that time. They also cautioned that regions where institutional investors have taken large positions in the residential real estate market may experience a greater impact if capital is withdrawn. Such dangers are not yet present in Montenegro, and builders and banks are doing well. (Source: Mina/Vijesti)