The Ministry of Construction expects that the value of the performed works in that sector will be higher by about 6.8 percent in 2020 compared to the past.
The National Bank of Serbia has allowed banks to approve housing loans for real estate that is in rough work, ie has excavation and construction, which is 60 percent completion, unlike the previous practice when loans could be approved only if the building is completed 80 percent.
When it comes to state-owned apartments built by the Construction Directorate of Serbia or state-owned cheap apartments for the security sector, banks will be able to approve a loan regardless of the construction phase of the building. In this way, construction is stimulated because the investor does not borrow. He has advance financing, that is, the end buyer lends to the investor, and in return he gets a cheaper apartment, because the price of the apartment that is bought ready-made is not the same when it is bought in rough work.
The state, therefore, encourages production by building apartments, but also demand, because there is no effect of just pumping money into the economy, and on the other hand saving and not spending. Everything is done in order to stimulate future economic growth, in which construction has a significant share.
The construction sector grew by as much as 35 percent in 2019. During the pandemic, construction did not stop at any time, even during the state of emergency. In the first half of the year, the value of construction works increased by eight percent compared to the same period last year, thanks to the growth in the first quarter.
In the second quarter of this year, the construction industry had a year-on-year decline of only 2.6 percent. The main challenge now is to preserve that trend and not allow construction to fall.
According to the data of the Republic Bureau of Statistics, the total number of issued building permits increased by 22.3 percent in the first three months, while it dropped by 37 percent in April, 26 percent in May, and only 2.3 percent in June. The number of apartments that will be built according to those permits in 2020 is higher in all months except April. In the first five months, the construction of 12,844 apartments was approved, which is 40 percent more than in the same period last year.
The Ministry of Construction expects that the value of the performed works in that sector will be higher by about 6.8 percent in 2020 compared to the past, said the State Secretary in that ministry, Miloje Obradovic, commenting on the new measures of the NBS. These measures should make it easier for citizens to access housing loans for the purchase of apartments and in the “gray phase” of construction.
He points out that the share of construction in GDP in 2016 was 3.9 percent, while last year it was 5.7 percent, and pointed out that Serbia is approaching highly developed countries in terms of the share of construction in GDP. Speaking about the new measures, Obradovic stated that they have multiple meanings, primarily for the citizens to get an apartment more easily, then for economic growth, but also for raising the living standard of the citizens.
– Now it is easier for all citizens to get a loan and get to the apartment, and not only to the first apartment, which we had as a previous measure. At the same time, the economy will be enabled a faster turnover of financial resources, and that will raise the growth and development of the economy through the construction industry – Obradovic concluded.
By the way, according to the data of the Association of Banks, the number of housing loans increased by about three percent from March to the end of June, which is also confirmed by Kaca Lazarevic, real estate agents and a certified appraiser. She says that the sale of apartments is going better than before the corona.
– Now it is cheaper to pay the loan installment than to rent an apartment. The share for loans has been reduced to 10 percent, interest rates are low and it is more profitable to invest in buying an apartment than saving in a bank. Flats are bought in new buildings and mostly on credit. This new recommendation of the NBS will further accelerate the purchase of apartments, but it remains to be seen how banks will implement it. Probably, such loans will have to be secured with the National Corporation for Insurance of Housing Loans – says Lazarevic.
Goran Rodic, vice president of the Construction Chamber of Serbia, says that the new temporary measure of pre-financing of apartments is good for investors, buyers and the state.
– There will be a larger turnover of money, an inflow in continuity and it will enable the avoidance of undeclared work. Contractors will have a year of advance financing for the execution of their works, so they will not have to hire workers illegally, to borrow on credit, but they will not be able to build without a permit. The end buyer will finance the construction and pay for the apartment cheaper than when the building is finished – says Rodic.
Depending on the investor, the price per square meter in the rough phase can be up to 90 percent lower. A square that costs 2,000 euros, when bought in rough work, can cost 1,800 euros. With the fact that Rodic warns that investors who have a closed financial construction will not agree to this, they will, he says, wait to finish the building and sell apartments at a higher price.
– Citizens must be careful and ask for an investor guarantee for the money they have given. In case of non-completion of the building to get the money back with interest – says Rodic.
Apart from investors, contractors and buyers, he adds, the state also received it because that money is directed directly to production, and in that way the state will also have a direct and indirect filling of the budget. According to him, in this way, the NBS accelerates production, strengthens the dinar and avoids unforeseen inflation, ie the devaluation of the dinar against the euro, Politika reports.
