The historical maximum, when it comes to real estate prices, is still ongoing. There’s no hope for a decrease, especially when it comes to new construction. Prices of old apartments may decrease by around 10%, but even that is questionable. Citizens are increasingly opting to build their own houses. Whichever option they choose, taking out a loan is inevitable.
There are several factors that have contributed to higher real estate prices. Construction materials, mostly imported, have increased in price by 50 to 100%. In some cases, even up to 200%, explains Sedzad Mizdrak. Even the little remaining workforce is being paid more. Land prices have also risen.
“What is still happening in Sarajevo is a shortage of real estate, weak supply; today, when you want to get real estate from Skenderija to Bascarsija, you have a very limited offer, and the square meters built in that area are drastically more expensive than the ones in the rest of the city. Although generally there is a demand for apartments in Sarajevo, there’s not enough supply; demand exceeds supply, and that affects the price per square meter. We used to be the cheapest in the region for a long time; in Sarajevo, you could buy a square meter for 900 euros three to four years ago, at the Stup location,” said Sedzad Mizdrak, director of a construction company.
Although we were the cheapest for a long time, it seems that prices are too high now.
In the city on the Vrbas River, the price per square meter in new buildings ranges from 3.500 to 4.500 BAM. In Bijeljina, from 2.100 to 3.000 BAM. In the southern part of the country, the prices are even more expensive. In Mostar, it’s from 3 to 4 thousand, the same in Trebinje. In the capital city of Bosnia and Herzegovina (BiH), the price per square meter of an apartment ranges from 3.500 to a staggering 10.000 BAM. Currently, it is financially more viable to build a house, says Haris Kadic, a real estate expert.
“In Sarajevo or some other larger cities, you can buy 100 square meters for 600-700 thousand BAM in a new building, while you can build a house with land that is at least double the size of this apartment for the same money. The problem is that our housing stock is old, so all the houses were built after the Second World War, in the 1960s, 1970s, and 1980s; these are already old BiH houses, one next to the other, no passage, no view,” Haris Kadic explained.
Old buildings are 10% cheaper?
People would even put up with the lack of a proper view if they could buy, citizens say. However, with an average salary or pension, it’s hard to think about investing.
“Today, only those who inherited something are lucky, but buying, especially for young people, is mission impossible. Look at the price per square meter in Sarajevo. Even young people with good incomes can’t afford it; it’s very difficult,” is one of the opinions of the surveyed citizens.
“For me, for example, the most profitable would be an apartment if I could get some kind of loan,” is another opinion.
However, whether they want to buy an apartment or a house, citizens of BiH are forced to take out loans. The total loans at the end of last year amounted to 23 and a half billion BAM. Of this total structure, consumer loans dominate.
Statistically speaking, there are far more non-purpose loans than housing loans. However, the money is mostly used for the same purposes.
“In the total structure of loans, housing loans traditionally occupy about 20% share in our banking system, which would be approximately 1.8 billion BAM, the rest relates to other forms of exposure. We are aware that in the overall statistics, the final amount of housing loans may not be correctly shown because a large number of citizens cover their housing needs, what we would call housing needs, colloquially from non-purpose, consumer loans. The fact is that it is easier to get a non-purpose loan than a housing loan,” said Admil Nukic from the Banking Agency of BiH.
Getting a housing unit is even harder. Even the old saying “good things come to those who wait” doesn’t apply anymore. Given that if there is a decrease in real estate prices, it will be for old construction and symbolic, about 5 to 10%, says the industry, N1 reports.
E.Dz.
