Change in the property market. Demand still lags far behind supply

Both prices and offer of apartments on the Bratislava’s residential secondary market have been stagnant for 4 months. Nevertheless, the current market behaviour does not suggest any further significant price drops. The supply-demand ratio has reversed with more apartments having been sold over the past year than came on the market. Despite a slight increase in the overall average price per m², there are districts that have also recorded a decrease in the average price per m² both year-on-year and quarter-on-quarter. The results are based on the regular report of the real estate agency Herrys for Q2 2023.

Despite the stabilised property prices on the secondary market, Herrys real estate agency has recorded a slight month-on-month price growth in 4 Bratislava city districts in the period of June/July, in the BA 1 district this being by an average of 75 EUR/m². The average price of apartments on the secondary market is 3 675 EUR/m², with roughly 4 463 apartments on offer (data from July 2023). Apartment prices are currently at the same level as November 2021.

“In a year-on-year comparison, prices for Q2 2023 may have seen the largest decline, but we attribute this to prices being at an all-time high a year ago. The current behaviour of the property market does not give any indications of further prices declining significantly, yet this does depend also on other factors. Based on our experience in property sales though we are seeing that buyers have already accepted the current price ranges and there is only minimal negotiation on lower prices,” said Filip Žoldák, partner at Herrys real estate agency.

New-builds

The supply of new-builds currently comprises 2939 apartments in 90 development projects. For the first half of 2023, this represents an increase of around 650 apartments, i.e. only half to a third of the long-term average. This means approximately 33% of the total number of apartments under construction are available. The number of completed unsold apartments has more than doubled and accounts for almost 12% of the total offer.

“The first half of 2023 has affirmed to us the fact that the offer on the new-build market will not be expanded by new projects as dynamically as in the past, since under the current conditions it is profitable for developers to build new apartments. On the other hand, the secondary market provides a relatively wide offer, where one third is made up of apartments in new buildings. With the supply on the secondary market not going down by roughly 30-40%, the demand for apartments under construction in new projects will focus mainly on projects that are somewhat unique. The projects shortly before completion have the edge, like the Metropolis project in downtown, as they no longer are looking at a sale on paper,” concluded Filip Žoldák.

Year-on-year, there has been a 72% decrease in the number of apartments sold. Quarter-on-quarter sales have increased by 21%, with a total of 229 new-build apartments sold in Q2 2023. The most popular alternatives are 2 and 3 room apartments, accounting for two thirds of sales. The focus on owner-occupier housing has been lagging behind investment housing, which is reflected in the proportion of sold 4 and 1 room apartments.

Price of new apartments has increased year-on-year

In 28 new-build projects, out of the total number of 90, prices have been adjusted either due to selling out of smaller apartments, which are more expensive per m², or due to a targeted downward price adjustment. Targeted discounts of more than 200 EUR/m² excl. VAT were seen primarily in projects that need to fully sell the completed offer, or, conversely, following a failed pre-sale or a long-stalled sale, to kickstart demand. The biggest discount recorded was 526 EUR/ m² excl. VAT on average for the entire project. The total average price is 3967 EUR/m² excl. VAT, representing year-on-year growth of more than 4%.

The small addition of new supply is a reflection of low sales. “The construction of new apartments will get kickstarted once increase in demand on the market has doubled at least or when the price of building materials has dropped. Nonetheless, with the announced measures to halt inflation and which would encourage still potential further interest rate increases, it can be assumed that new construction in the current volumes will be postponed for “better times”,” concluded Filip Žoldák.