The rise in property prices in 2021 and the role of the state

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In the outgoing 2021, the price per square meter increased in Belgrade + 10.25%, Novi Sad + 11.93%, Nis + 11.18%. When you look at the price of renting, the growth is even higher, so in Belgrade it is + 19.39%, in Novi Sad + 6.53%, while in Nis the rent has increased by + 15.50%.

Another year has passed in which real estate prices have recorded double-digit growth rates, and while some refuse to believe that supply and demand have found themselves at an even higher value this year than last year, the reasons why this is so are increasingly visible.

Although loans have been very favorable for many years, the share of cash payments in real estate transactions has not fallen below 70 percent, which speaks of the traditional distrust of our people in banks and bank loans, as well as popular pallets that are being emptied this year. However, there has been a noticeable increase in real estate payments from loans in the past year. This trend will continue in the next year, which could be the last year for launching loans on favorable terms.

According to the address of the Governor of the National Bank of Serbia, Jorgovanka Tabaković, denying that interest rates are expected to rise next year, it is clear that the government wants to maintain interest in real estate because the moment central banks decide to raise interest rates it will also send a signal to investors that the cycle of cheap money has passed, which will be reflected in all ways of investing, not only in real estate. Then money will become more expensive, inflation will be brought to the target range, so people will not be afraid that their money will lose value.
Why do countries have a high price of housing?
Through the project “Belgrade on Water” (and not only to him) in which the state has a share, there is also an interest in keeping real estate prices at this level. In the pandemic, there was an increase in the price of construction materials, so even a slightly lower price of real estate can bring into question the profitability of the entire project.

It is clear that the price of a square meter in Belgrade on the water cannot be above 3,500 € / m2 if it does not exceed 2,000 € / m2 in the rest of Belgrade. Therefore, every stimulus to the demand for real estate means a higher price of apartments for the largest state project when it comes to real estate.

In what ways does the state stimulate the demand for real estate?
So far, most of the real estate turnover is realized from cash. However, since this method of payment is becoming weaker because cash is not unlimited, it is being spent, and an increasing share of credit buyers is expected. Last year, the minimum share in housing loans was lowered as an incentive. Not all banks have offered these conditions, which clearly expresses their concern. And how could it not be, if someone does not have a 20% share, how will he be able to repay the loan for the next 30 years, where real estate prices are expected to fall in a couple of years?
These days, the Government has also decided to help young mothers with 300,000 dinars when buying an apartment. Why right now and why does that money have to be used to buy real estate?

Those 2,500 euros make up barely 5% of the price of a property that would satisfy a family of three in the wider part of Belgrade. When it is known that real estate prices have jumped by 5% in the last 6 months alone, it is clear that this aid finances price growth, does not mean much and can only lead to risky decisions because it creates the illusion that now is the right time for one family use this help to buy an apartment.

Is the state aware of the risks it exposes its citizens to? Does the state really care about its citizens? Who are we to oppose the help of 300,000 dinars, and even mothers?
In any case, we are witnessing the filling of the last car of the last train for buying real estate. It is a wagon that, if the locomotive cannot pull so far uphill, will be the first to unhook. That wagon will be full of young mothers who will use this help, as well as those who will use it to take a loan with a 10% share, but also full of banks that will not be able to collect those loans with low real estate prices. However, the state will save them later, while the others will not.