Trends of Real Estate Market Development in Slovenia

Annual report of the State Department of Geodesy for 2016 officially confirms that the real estate market in Slovenia is on the rise.

Housing prices are slowly but surely growing, while the number of transactions has already approached the record 2007-year’s indicators. Last year, the turnover in the real estate market amounted to more than 2 billion euros, which is 0.5 billion euros more than in 2015.

The main conclusions of the Geodesy Department regarding the situation in the real estate market in 2016 are as follows:

– After a fall in the level of prices for residential real estate in Slovenia, the stabilization began in 2015. Last year the cost of houses and apartments began to grow, and this is an absolute sign of the market recovery.

– The growth in demand for real estate is determined mainly by low interest rates for loans, employment growth and salaries, as well as a decline in house price.

– The low interest rates together with loans for the purchase or construction of housing also stimulate investments in real estate.

– The primary housing fund built during the crisis is almost sold out and cannot cover the growing demand for new housing. There are virtually no major construction projects, and therefore the beginning of a new investment cycle can be expected in the future.

1. What Is the Situation with Prices?

The last year’s prices for secondary housing in Slovenia, as compared to 2015, increased by 4%. The growth is mainly recorded in Ljubljana and the suburbs (Ljubljana in okolica) as well as in Koper (Koper; Obalno-Kraška regija). Last year, the prices in the Lower Styria Region (Štajerska) declined, and the number of sales transactions, as compared to 2015, grew by about 20%.

2. Ljubljana Is Growing: One Square Metre Costs More Than 2,000 Euros

The last year’s average cost of a secondary housing in Ljubljana, as compared to 2015, increased by 7%. On average, one had to pay about 2,180 euros per 1 sq. m. “Since the beginning of last year, prices for the secondary residential real estate in the capital of Slovenia have shown moderate growth. However, last year they were still one-fifth lower if compared to the record year 2008,” the Department of Geodesy states.

“In 2016, the cost of secondary housing in Ljubljana surpassed the mark of 2,000 euros per square meter. The difference in price around the capital, depending on its district, reduced as compared to the year 2015. The city centre continues to lead in the level of prices, where the average cost of housing was 11% higher than the average price around the city,” the Department of Geodesy notes. The lowest prices for secondary housing were recorded in the Moste district (last year they grew by 9%).

The Department of Geodesy notes, “The number of deals and the price level as compared to 2015 increased most in the Bežigrad district, and least in the Vič district. A relatively small increase in prices was recorded in the centre of Ljubljana. Last year, 9 deals for the purchase and sale of housing were registered in Ljubljana, costing from 500,000 euros and above.

The highest prices (650,000 euros including VAT) were set for primary housing in the Situla microdistrict and in the residential complex of the Rožna dolina microdistrict.”

3. The Number of Transactions Is Approaching the Level of 2007. High Demand for Land

Last year, the number of transactions was the largest since 2007. If compared to the year 2015, the number of sales rose by one-tenth, and in comparison with the year 2009 it increased by nearly 60%. Last year, the total value of all real estate transactions in Slovenia amounted to about 2.1 billion euros and for the first time after the record year 2007 exceeded the amount of 2 billion euros (in 2007—2.3 billion euros). Last year the figure was 1.6 billion euros.

Positive dynamics is observed in the segment of selling land plots for construction. “Over the past year, there was a noticeable increase in demand for development land. Last year, about 2,800 such transactions were carried out, which was the highest indicator since 2009, when investments in land and primary housing almost ceased. Compared to 2015, the number of transactions increased by 17%. About 85% of executed sales and purchase transactions relate to the land plots for housing construction, and almost 15% relate to the land sites intended for construction of industrial facilities and business centres,” the Department of Geodesy notes.

4. The Forecast of the Department of Geodesy. The Number of Real Estate Transactions Will Remain at a Former Level, and the Prices Will Grow

The forecasts of the Department of Geodesy are reduced to three key points:

– “At present the Slovenian real estate market is in a stage of transition from revival to growth.”

– “Unsold objects in new buildings erected in recent years enter the market. However, selling the already commissioned apartments has not increased significantly. Most of the sold primary market’s objects, in view of the increasing demand, have reached the weighted market price values ​​(including the auction prices).”

– “This year, given the significant growth in sales in the last three years and the achieved number of transactions, it is possible to expect a gradual slowdown in the growth in the number of transactions in the residential real estate market. A further rise in prices for apartments, private houses and construction land plots is expected. The fastest growth in prices is expected on the Adriatic coast, in Ljubljana and the suburbs—the regions with the highest level of demand, which gradually exceeds the supply. In the medium term, the price of housing will also increase in those regions that earlier experienced a decline, for example, in Maribor and Novo-Mesto.