Profile of real estate buyers in Serbia: Apartments as investment, cash buyers prevail

In recent times, more and more people are postponing the decision on long-term real estate debt due to high prices per square meter and rising loan rates. However, prices for square meters are still not going down, despite the obvious decrease in demand.

With euroboras rising, which affects the increase in monthly payments, more and more people are buying apartments as an investment. Currently, the ratio is 60 to 40 in favor of investment buyers, and there are still more cash buyers. Cash buyers are still mostly from the IT industry, entrepreneurs, owners who sell their own apartments and invest the money received in real estate, as well as those who inherit apartments and then decide to buy new ones.

In the second quarter of this year, 30,548 properties were sold in Serbia. Although data from the State Surveyor's Office for the second quarter of this year shows a slight decline in demand, the real estate market is still well above pre-pandemic levels, with a value of €1.7 billion even 70% higher than in 2019.

Profile of apartment buyers

Assessor Milic Djokovic says that the profile of a typical apartment buyer differs depending on whether they are buying a property for living or as an investment. Those who are looking for an apartment for personal needs are usually a married 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 is employed in the public service and the other works in the private sector or has his or her own business. Cash is paid mainly by older people who have sold their large apartment to buy two smaller ones, one of which is for younger family members, or by those who want to keep their savings and surplus money to invest in real estate.

"Young people buy an apartment on credit, usually no later than age 45, because banks later refuse or don't approve loans at all. When these young people, i.e. a young married couple, buy an apartment on credit, their sellers basically buy further with cash. These sellers are then cash buyers, middle-aged and older people, 40 to 80 years of age and older. About 60% or two-thirds of young people decide to buy their first apartment in a new building from a developer, while older people have the opposite trend, with two-thirds opting for an older building. There is a conflict of generations and opinions about what is good here.

Buyers' background

The executive director of City Expert Miloš Mitić told Euronews Serbia that most Belgrade residents who are deciding on housing usually buy an apartment on credit for a family of 50 square meters, costing up to 100,000 euros, on the outskirts of districts such as Mirijevo, Višnička Banja, Rakovica, Krnjača, far parts of Zemun and Vojdovac. He says all those who were on the verge of solving their housing problem with a loan are now postponing the purchase. On the other hand, as Mitic points out, many people in the IT industry and entrepreneurs who own their own businesses are still buying apartments with cash.

"There are people who sell their apartments and become cash buyers and then invest the money further, as well as people who inherit some apartments and then sell and buy. As for professions, they are entrepreneurs, people from the IT industry, that is, the digital sector, all professions related to new technologies," Mitić said.

The origin of buyers

When it comes to the origin of buyers, Djokovic says that it cannot be said that the typical buyer is a Belgrade resident, because only every third buyer already lives in the capital. "We did an analysis which showed that a little over 10% of buyers come from abroad, about the same number come from countries in the region, such as Bosnia and Herzegovina, Croatia and Montenegro, and in a similar percentage people from Kosovo and Metohija. About 30% come from the regions and about 30% from Belgrade. In a small percentage, about 5%, they are foreigners 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," explains Milic Djokovic for 4zida.

He notes that there are no rules when it comes to professions, and adds that there was expressed interest from IT professionals, but the last few months it has decreased due to the crisis, which also affected this industry. "There are small business people, they invest in real estate, thus avoiding income tax. Real estate is a constant value and people of all profiles are invested," says the appraiser.

He notes that it is increasingly difficult for loan buyers to "make a decision" and get a loan. First, because the high prices per square meter "forced" to increase the size of the down payment, so that even 20,000 euros is not enough for a contribution of 20%, and then because of increasingly difficult credit 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 achieve. It is difficult for them to prepare the down payment, and they must have an income of at least 155,000 dinars, which is about 1,400 euros, for the bank to approve the loan," says Milic Djokovic.