Real estate prices in Slovenia have been increasing at a furious pace
Ljubljana, the capital city of Slovenia, has strongly rebounded from the recession. Since the bottom of the recession in 2015 till 2017, the average real estate price has increased by 15%. However, the price growth accelerated in 2018, making Ljubljana one of the hottest real estate markets in the world.
Written by Dr. Ales Pustovrh – Bogatin, EECFA Slovenia
Following the peak in 2008, the Slovenian construction and real estate markets experienced a catastrophic slump. Total construction output decreased from EUR 4.6bln in 2008 to EUR 2.3bln in 2016 according to EECFA. The average real estate price in Ljubljana dropped by 25% between 2008 and 2015 (although the average price hides significant differences in price trends in different neighbourhoods and real-estate segments).
However, on the back of the strong economic growth in the last few years, prices started growing again. In Ljubljana, they increased by 15% between 2015 and 2017 according to GURS[1], the national database. In 2017, KnightFrank’s Global Residential Cities Index estimates that residential real-estate in Ljubljana has increased by another 4.4 %[2].
And the pace of real-estate price hikes seems to be accelerating further. In the last quarter of 2017, the annualized real estate price growth reached 10%[3], trailing only behind Ireland and Portugal among the EU28 countries. Prices of existing flats in Ljubljana went up by almost 15% in 2017, according to the Slovenian Statistical Office. This would put Ljubljana in the top 10 of the global cities with the fastest growth in real-estate prices[2].
Fast-increasing prices of real estates in Ljubljana and Slovenia have resulted in the total clearing of the existing stock of completed dwellings, raising pressure for new residential construction. Several large residential construction projects, halted during the crisis, have been re-activated in Ljubljana and will enter the market in 2018 and 2019. However, new dwellings remain scarce at the moment as these developments have not hit the market yet.
If the economy remains strong, it will keep demand for real estate (financed by cheap and affordable mortgages) high and it will continue to lead to fast-increasing real estate prices of existing dwellings. This means that Ljubljana might remain among the hottest real estate markets for a few quarters more.
More details on the construction forecast for Slovenia are available in the EECFA Forecast Report Slovenia. The new report – together with the other 7 EECFA Forecast Reports – will be released on 18 June 2018.
Sources and footnotes:
[1] http://www.trgnepremicnin.si/podatki/dokumenti/porocila/Polletno_porocilo_2017_I.pdf
[3] http://www.stat.si/StatWeb/en/News/Index/7306