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Slovakia Real Estate Buyers Guide 2008
General description of the market
Brief SummaryThe real estate market in Slovakia has been growing dynamicaly and it reached average yearly growth in value of residential properties on the level of 15 % in several consecutive years. The majority of new developments are located in Bratislava and surrounding municipalities. Other regions of Slovakia recorded a considerable inflow of investment into Slovak tourist resorts over the last five years, in particular into the ski and spa resorts.
Real estate prices are currently significantly lower than in Western Europe, however, given the location of the country and its rapid economic growth prices are expected to approximate to Western European standards.
Investment in the real estate in Slovakia offers advantages of transparent market, high domestic demand and overall swift economic growth. Slovakia has the residential real estate market significant by the unique combination of its parameters: low prices, low risk, high transparency and predictability of the market.
Reputable real estate agents and developers are expecting overall growth of 10-13% p.a. on the residential real estate market in Slovakia over next couple of years. The lack of accommodation will be the driving force of increasing value of properties. Regional market in Slovakia will copy the development in Bratislava. Rise on the residential real estate market will be concentrated in the areas with highest foreign direct investment where higher monthly incomes will make new housing affordable.
In the year 2007 real estate prices growth was about 24% (source NBS). It reached its peak by the end of the year. The demand was enormous; investors used investment in real estate as a medium to prevent inflation losses expected after January 2009.
In the year 2008 slowdown has been observed and prices have stabilized. Many new sizeable development projects entered the market causing closure in the mid-term gap between demand and supply on the housing market. Besides, Slovakia is going to join Eurozone in 2009 and many investors have been waiting for the announcement of the conversion exchange rate. Constant growth in value of Slovak Crown since January 2008 has drawn investors into a wait-and-see position.
There is an expectation that the market will start moving again in the second half of 2008. The rise of prices of real estate is predicted to be steady, reaching app. 17 % p.a. on average. Price are expected to be influenced by domestic demographic situation, growth in personal incomes, comeback of young Slovaks from abroad and lower interest rates on mortgages; rather than joining the Eurozone itself.
