With the rising prices of real estate, the selection of properties is gradually narrowing. Demand is expected to grow along with prices, an expert told HN

For the past two years, reports on the real estate market have often started with headlines hinting at declines, downturns, or price reductions. These terms, resulting from cooled demand due to worsened mortgage conditions, have long suggested an ongoing decrease in property prices.

Many analysts and ordinary people alike were eagerly waiting for the European Central Bank (ECB) to take its first step and finally put the brakes on interest rates. Consumers were monitoring developments and concluded they would only proceed with purchasing when mortgage rates dropped. In June, the ECB lowered its key rate by 0.25 percentage points to 4.25%.

Over time, sentiment shifted, and it appears that with rising demand, prices have slowly begun to increase as well.

Prices Rise, Supply Declines

According to the real estate agency HERRYS, which released the latest data on the secondary residential market in July, the Bratislava real estate market continues to perform well, particularly in terms of price growth. Prices have risen by 2.69% since the beginning of the year, equivalent to an increase of 100 euros per square meter. The average price of the entire offering thus reached 3,809 euros per square meter.

“The price increase may be the result of higher asking prices for resold properties in lucrative projects and locations. We also observe faster decision-making by buyers and acceptance of the asking prices of apartments,” the agency stated.

Filip Žoldák, co-owner of HERRYS, explained to HN that the low prices recorded at the end of last year and the beginning of this year started to rise due to higher demand and sales, as well as the increased likelihood of future interest rate cuts.

“The fact that prices dropped to their lowest level in recent years motivated buyers who really needed to purchase a new property, with the expectation that interest rates would decrease over the next 12 to 24 months,” Žoldák said.

Recently, some Slovak banks have also lowered interest rates on mortgages. Lower interest rates often lead to a renewed increase in real estate prices in practice. With the prospect of lower interest rates, buyer interest increases, and they are more willing to accept the asking prices, according to Žoldák. The analysis shows that their incomes have risen, and they have also begun to accept current interest rate levels. This has subsequently led to quicker sales of individual listings.

However, according to Žoldák, the primary motivation was not the expectation that interest rates would fall to a specific level. In that case, rates would have to drop below two or even one percent, which is unrealistic within the next year.

“Buyers rather took advantage of the situation when property prices dropped to their lowest level in the last two years. Consequently, the Bratislava secondary market also had the broadest selection at the lowest prices, from which there is still a good range to choose from,” the expert continued.

Increased Sales Will Continue

According to the report, a third of the market's offerings still consist of new buildings, with the largest share generally being three-room apartments. However, the overall supply of apartments has slightly decreased. In July, the Bratislava secondary residential market recorded a ten percent drop in property supply compared to the previous month. Year-on-year, there are now a thousand fewer apartments available.

“We assume that these apartments have been sold, based on our own experience, which shows that the market has picked up and more sales are happening. The effectiveness of viewings is increasing, and buyers today are already accepting the asking prices at which properties are being advertised,” said Žoldák.

With the gradual revival of the real estate market and the increase in transaction volume, the expert expects the trend of increased sales to continue. This is also evident with new builds, where as many apartments were sold in the first half of this year as in the entire previous year.

“Sentiment is improving; people perceive the prospects of lowering interest rates positively, and confidence in purchasing real estate for housing is returning, even among investment clients. We believe that demand for real estate will persist and will also slightly increase, which will lead to a gradual rise in prices. Prices have already been rising for three consecutive months,” the expert continued.

The recent increase was also confirmed by the quarterly statistics of the National Bank of Slovakia. Data from the institution showed that in the second quarter, asking prices for real estate rose slightly by 1.6% compared to the previous quarter. This marks the first increase between quarters since the third quarter of 2022. However, year-on-year figures are still below zero, with a decline of 1.3%.

The average price of real estate per square meter reached 2,461 euros, which is 39 euros more than in the previous quarter. The average price of apartments in the second quarter reached 2,749 euros per square meter, increasing by 60 euros or 2.2% compared to the previous quarter.