15th April 2021

Apartment prices continue to rise, rents are waiting for a slight recovery

Apartment prices continue to rise, rents are waiting for a slight recovery
Despite the unfavorable economic consequences of the current crisis, last year sale prices of flats and houses in the capital and its surroundings recorded double-digit growth. Although the number of concluded contracts increased in terms of leases, prices fell slightly. This follows from the data of the real estate agency HERRYS, which is the largest real estate agency in Bratislava with more than 800 transactions per year. This year, property prices will continue to rise despite continued restrictions, and rental prices could return to their original levels at the end of the year before the pandemic began.
More apartments for rent
At the beginning of last year, the number of vacant flats for rent in the offer of the real estate agency was stable, the turning point occurred in March, when the coronavirus pandemic fully stroke itself in Slovakia as well. "In particular, we added flats that the owners rented in the form of the Airbnb services or flats that were vacated by foreign employees of multinational companies. Overall, our rental offer increased by 40 percent during the first wave of the pandemic, "says Martin Marsina, a partner at the HERRYS real estate agency.
Since May, the number of offers has been gradually declining, mainly due to significantly increased demand. "In July and August, we made 107 leases, which was an increase of 75 percent compared to 2019. After the measures were released, the deferred consumption from the first wave of the pandemic was fully reflected. We also recorded a higher number of leases for foreign employees of large companies, "explains Martin Marsina. The number of available properties increased again at the end of the last year, when the beginning of winter brought 30 percent more vacant flats compared to autumn. Despite the turbulent year, the number of leases concluded by the Bratislava real estate agency increased by a fifth to 396 contracts throughout the year, and the average rent without energy within the real estate agency's transactions last year was 667 euros per month.
Who was looking for a rent and what did they choose from
According to data from the real estate agency HERRYS, the average age of those interested in renting in Bratislava last year was 33 years. Property owners were slightly older and their average age was 46 years. Most often, two-room flats were rented, which accounted for up to half of all real estate agency contracts. The second most common property for rent last year was three-room apartments (23 percent). The rest consisted of one-bedroom apartments and studios (14 percent), four-room apartments (5 percent) and family houses (3 percent). The most attractive locations were Staré Mesto and Ružinov, which accounted for more than 60 percent of all office leases. The development trend in rents pointed to a preference for new housing over older properties, which in practice meant that last year almost every third leased property was less than 5 years old.
Last year, those interested in renting housing had a choice from a significantly larger offer than in previous years, so they preferred well-designed and fully furnished properties. The owners thus had to differ significantly from the competition with their offers. "Real estate did not have to be luxurious, but tenants preferred fully furnished apartments and houses. This was most evident in the middle segment, in which, for example, the owners of two-room apartments with fully furnished real estate, including decorations and all necessary appliances, succeeded, ”adds Martin Marsina. On the contrary, the owners, who decided to rent unfurnished apartments or houses, waited much longer for those interested.
The sale of flats brought a new type of buyer last year
Despite significant anti-pandemic measures, several lockdowns and redundancies in the labor market, the secondary market and real estate prices continued to rise last year. Higher prices of sold properties compared to the previous year were also recorded in the real estate agency HERRYS. There are several reasons. "Advantageous bank financing is still available, as the average interest rate on mortgages fell by half a percent year on year. Another reason is the still limited supply of development projects, which have not been able to cover demand for several years, ”explains Martin Marsina.
Although the real estate agency recorded approximately the same number of concluded contracts, the prices of sold real estate increased by 11 percent last year. Despite the situation, clients did not postpone their decision, as they expect further price increases. As much as 80 percent of the apartments sold on the secondary market were sold by the real estate agency HERRYS to those interested in their own housing. The typical buyer of this Bratislava real estate agency was 38 years old and the average age of the seller was six years higher. The buyers showed interest mainly in three-room apartments, where HERRYS recorded a third more interest than a year ago. The second most common choice of buyers was two-room apartments (28 percent). Less than a fifth of the flats sold were studios and one-bedroom flats in the largest real estate agency. Every tenth property sold in and around the capital was a family home. Constructions under the age of five also succeeded, accounting for a fifth of all real estate sales. The most popular locality was Ružinov (26 percent), followed by Dúbravka and Karlova Ves (18 percent) and Nový Mesto (16 percent).
When concluding contracts, real estate agents registered various moods of buyers. More and more often, people decided to protect their savings from the expected rise in inflation. "Several clients took their money from various financial products last year and transferred it to real estate," says Martin Marsina. A new large group of clients of the real estate agency HERRYS were buyers who, in addition to the purchased real estate, established a parent or sibling apartment. Without it, they would not be able to afford their own housing. "Compared to the past, we have even dealt with more cases where the parents themselves co-owned the purchased property or the parents themselves took out a loan," adds Martin Marsina.
Market and trends in 2021
Already during the first weeks of the new year, there is a clear interest in the market for both renting and buying real estate. "In the case of a purchase, we expect that the purchase for our own housing will still dominate. As last year, this year we expect lower interest in the secondary market for the purchase of investment apartments, "says Martin Marsina. In the first half of this year, the trends of 2020 will resonate in sales, and thus the offer of flats for sale will still not be able to cover the demand of interested parties. Prices when buying real estate will continue to rise.
The second half of the year could once again attract students and company employees to the capital, which should be reflected in higher demand for rents. Of course, everything will depend on the current pandemic situation. In the case of rents, prices can thus gradually return to the level they had before the pandemic in the second half of the year, or at the beginning of 2022. "The rental offer in the middle and upper segment is on average 10 percent cheaper today than a year ago. In the second half of the year, we assume that the arrival of people to the capital will accelerate demand and prices could approach that of them before March 2020", says Martin Marsina.