Who buys real estate in Serbia? Economy: buying apartments for 100 thousand euros

The prices of real estate in Serbia are not decreasing, despite the decrease in demand. I wonder who still has the means to buy them? Second quarter data from the Republican Surveyor's Office (RGZ) shows a slight drop in demand, but the real estate market is still well above pre-pandemic levels, and its €1.7 billion value is 70% more than in 2019.

Evaluator Milic Djokovic says the profile of the average apartment buyer depends on whether they are buying a property to live in or as an investment.

Those looking for an apartment for personal needs are usually a couple with one child between 30 and 40 years old and choose a new building of about 50-60 square meters, for which they take a loan. In 70% of cases, one of them works in the civil service and the other works in a private enterprise or has his/her own business.

Cash is bought mainly by older people who have sold their larger apartment to buy two smaller ones, one of which is for younger family members, or by those who want to invest savings and surplus money in real estate.

"The young buy on credit, at the last minute, no later than age 45, because banks later refuse or do not approve the loan at all. When that young person, I mean young couple, buys a property on credit, their sellers tend to buy further with cash. These sellers then become cash buyers, middle-aged and older people, 40 to 80 years of age or older. About 60% or two-thirds of young people choose to buy their first apartment in new construction from a builder, while older people show the opposite trend - two-thirds of them choose old construction.

According to data from the Republican Institute of Statistics (RZS), new apartments with an area of 57 square meters were sold last year.

Milic Djokovic says that data and practice show that women now have a slight advantage in the number of apartments bought, but notes that the fact that women have become the main buyers in the ratio of about 55 to 45 percent of men does not matter much, because the apartment is the joint property of the spouses, so it is less important which of them buys it.

When it comes to the origin of the buyers, Djokovic says that you cannot say that the average buyer is a Belgrade resident, because only one in three buyers already lives in the capital.

"We did an analysis that showed that a little more than 10% of buyers are from the diaspora, the same amount from countries in the region, such as Bosnia and Herzegovina, Croatia and Montenegro, and about the same percentage of people from Kosovo and Metohija. About 30% comes from the province and about 30% from Belgrade. In a small percentage, about 5%, they are foreigners, those who buy for investment, for profit, and it does not matter to them whether they buy in Belgrade or in Tirana, they look where it will be more profitable for them," Milic Djokovic explains.

He notes that there are no rules when it comes to professions, and adds that there was interest from IT specialists, but it has decreased in the last few months because of the crisis, which also affected this industry.

"There are small business people investing in real estate to avoid income tax. Real estate is a constant value and people of all profiles are invested," says the appraiser.

He notes that loan buyers are finding it increasingly difficult to "break even" and get a loan. First, because high prices for square meters have also "customized" the down payment requirements, so that now even 20,000 euros is not enough to cover the 20% contribution, and then because of increasingly difficult loan conditions and high interest rates.

"Today it is difficult to buy a family apartment for 100,000 euros, and even this amount is difficult for most families to afford. It is difficult for them to prepare a down payment, as well as to have an income of at least 155,000 dinars, i.e. about 1,400 euros, in order for the bank to approve the loan," says Milic Djokovic.

The average salary in Serbia in May was 86,220 dinars, but according to the RZS, more than 50 percent of employed people earned less than 66,244 dinars.

Djokovic notes that it is understandable why the share of credit buyers of real estate is decreasing, because the Credit Bureau takes into account all debts - credit cards, authorized overdrafts and checks, and full debts, and those who already have such debts, the chances of getting a mortgage loan are decreasing.