It is common knowledge that the real estate market is quite sensitive to various social disturbances and all the activities related to building and property transactions are affected by many factors.
Striking economic crisis with its momentum in 2008 had minimized the building of new apartments to the extent that instead of 40 building sites in 2007, just in Hadzi Ruvimova Street in Novi Sad, currently there are less building sites in the whole city of Novi Sad.
The main reason for that is certainly low demand. The number of buyers is decreasing as well as their financial solvency.
Why the number of property buyers has decreased?
The answer is quite clear. The volume and amount of capital flows on the real estate market has significantly decreased. During the 90’s and 2000’s, we were witnesses of great migrations from former Yugoslav republics where the war took its toll. In the search for better living conditions, people were moving to Novi Sad with their families and were buying properties here.
The other significant additional resource used for property investments was the process of privatization of large economic systems in Vojvodina, such as brewery companies and cement factories.
At the same time, banking sector experienced its prosperity and a lot of citizens decided to get a mortgage loan in order to solve their housing problems.
Such influx and high demand caused rapid expansion of the building sector and many investors made their investments in this sector, although they had no experience with building until then. What mostly influenced their decision is the fact that building residential and commercial buildings brought much safer and faster capital turnover than any other business.
Nowadays, without large migrations, privatization cash flows or any other opportunities, property demand as a consequence, declined rapidly.
In addition, low living standard and average income have affected the real estate market.
High unemployment, mass layoffs and corresponding uncertainty of working places as well as expensive and unfavorable conditions of mortgage loans caused reasonable fear among potential clients; all being related to their existing debts in the banks and the difficulties in servicing them.
Real estate never lies idle
In spite of all the factors mentioned above which caused real estate market to fade, it is still functional, to a much lesser extent, though.
Life cannot wait for better times. Usually, circumstances dictate our way of life. At one point, in every family life cycle comes the need for a change, for a new property. For instance, the existing property becomes too small, due to new members or vice versa; the family members are old enough to leave, so the property becomes too spacious.
Unfortunately, due to already mentioned low living standard, a lot of people find monthly utilities too expensive and tend to move to smaller apartments and properties. In addition, there is a recent implicit tendency of young families to move from the city to local rural areas in order to minimize the costs of living which became unbearable with the layoffs.
Apartments in the city of Novi Sad
The most common property transactions on the market are the transactions of apartments in the residential areas and to a less extent, those of family houses.
Perception of current social relations of everyday life is projected onto property transactions. Precisely in the domain of property transactions, social disintegration is clearly visible. In recent years there is a great number of buyers interested in low-priced properties; the price varies in the range from 15.000 to 25.000 euros.
Likewise, there is a certain number of buyers interested in luxurious properties whose prices might even reach several hundreds of thousands of euros. However, there is the least interest for the ‘working class’ apartments from the communist period; for instance, two or three room apartments.
As a consequence, today one might find one and half-room apartments with the total area of only 25/26 square meters or two and half-room apartments within 40-45 square meters.
Low property demand affects decline in the prices directly; therefore, new efficiency apartments’ prices were 1.800/2.000 euros per square meter in 2008, nowadays, they can be easily bought for half of that price.
Rough assessment made by real estate specialists is that currently there are no factors which might initiate rising in the property prices. General tendency of decline in the prices is still present, so when the seller has to sell his property for some reason, he cannot expect the real and prospected price if he wants to attract the potential buyer.
Business premises in the time of crisis
Since its foundation in 1992, real estate agency SOLIS besides selling houses and apartments, also deals with the sale of business premises, commercial and industrial facilities, as well as large building lots for commercial-logistic purposes.
Having such a business climate in this area, many people are forced to close down their small and medium businesses, leaving many business premises and offices empty and available for sale on the real estate market. Most of those business premises are almost impossible to sell at a minimum price for the reason of small number of interested buyers. On the other hand, there are always clients interested in business premises in attractive locations in the city, like street-view offices in the pedestrian zone or in the Bulevar Oslobodjenja Street, which can sometimes reach the price of 5.000 euro/m2, depending on location and the quality of equipment.
The purchase of agricultural arable land has had a tendency to rise in recent years; however this tendency is declining due to high pricing of this type of land. For example, the price for an acre of quality arable land in Vojvodina is about 12.000 to 15.000 euros and sometimes even more.
Waiting for better times…
According to everything mentioned above one can draw an overall conclusion that this year is going to be quite similar to the previous one.
Property transactions will be low; property prices will remain in the state of stagnation or slightly decrease, while some significant improvements can be expected solely with a change of social climate and economy growth.
One can only hope that this waiting for better times will not be too long.