STA, 18 May 2022 - The Slovenian property market saw a record year in 2021 in terms of increase in prices and the number of transactions involving land for residential buildings, with the commercial property market also being revived. The Surveying and Mapping Authority (Geodetska uprava) has reported more than 37,000 transactions worth a total of EUR 2.9 billion.
The number of transactions in apartments and houses increased by about 20% last year compared to 2020 and was higher than the figure for the pre-epidemic year 2019.
The increase mainly owes to the record sales of houses, caused by the growing demand for houses outside urban centres, shows the report by the Surveying and Mapping Authority on the Slovenian property market for 2021.
Last year, the market for land for residential construction "virtually exploded", the report says, noting that compared to 2020, the number of transactions in land for houses and multi-apartment buildings was up by approximately 45%.
In the tourist centres in the Slovenian Alps, the number was up by more than 80%, in the southern suburbs of Ljubljana by about two-thirds, in Ljubljana and Celje by about 60% and in Maribor by about 45%.
According to the report, the record number of land transactions is expected to be followed by an accelerated expansion of housing construction, which has in the last three years been notable in the capital, but also in other parts of the country.
Prices of apartments in multi-apartment buildings increased by 15% last year, while prices of houses were up by 13%. Land for construction of residential buildings was meanwhile 12% more expensive than in 2020.
The growth in prices of residential property is the result of excess demand, with the supply of new buildings gradually catching up, the reports says.
The high demand for residential property for own use, and especially as an investment, is still being largely driven by low interest rates and accessibility of loans, and, more recently, by the growing fears of increased inflation.
Putting additional pressure on the property prices is the high growth of construction costs due to the global rise in energy prices and building materials due to the Covid-19 pandemic and, as of recently, the war in Ukraine.
The report notes that, considering the prices and the volume of new construction in Ljubljana, a peak of the property cycle is near, as the market supply will exceed demand that could be backed by solvency and sales will be slowing down.
A general decline in demand for residential property could also be triggered by a rise in interest rates that is expected in the near future, while a turnaround in the price trend is not expected until supply exceeds demand.
The report notes that the number of transactions with commercial property increased by approximately 30% last year, but the number was nevertheless still some 10% lower than in the pre-Covid year 2019.
A PDF of the full report, in Slovene, can be found here