Demand for apartments is rising, while the supply of new and old is constantly falling

Buyers in the capital are steadily driving up demand for apartments, due mainly to rising prices. The supply of available apartments in new buildings, including the secondary market, fell by 14% against the second quarter according to transactions figures from the Herrys real estate agency.

The constant growth in real estate prices in Bratislava has caused a panic increase in demand, with the third quarter of 2021 seeing as many apartments sold as came on the market. Due to this low supply, combined with higher input costs such as energy and building materials, and still affordable financing, prices are expected to continue to rise.

There are roughly 1 800 apartments currently unsold in projects under construction, of which only about 60% are for sale. The most unsold apartments in projects under construction are in the Bratislava I district, with the least in the Bratislava IV district. The number of vacant apartments decreased by 4% compared to the same period last year, yet by 14% against the previous quarter.

Sales of apartments in new buildings have increased by 15% against a year earlier, with Herrys real estate agency registering a 300% y/y increase in interest in them. The third quarter saw the sale of 584 apartments in new projects in Bratislava. Popular projects are those in the middle lower and middle segment, which have launched sales or a new stage of sales. However, there is also huge demand for projects in the new downtown, with prices per square metre reaching €8 000 incl. VAT, thanks mainly to the attractive location and good prospects for long-term value retention.

“The current sales trend confirms that real estate is now a seller’s market. The current situation shows that almost everything will be sold despite the high prices. Nearly 60% of apartments have been sold in multi-stage projects at an average price below 3 000 €/m2 excl. VAT. The average rate of apartment sales is at the level of 3.5 apartments per month per project, though 15 projects have recorded a rate that is 2 to 3 times that. The reason is mainly the new offer in these projects or attractive pricing. In these sorts of projects, more than 30% of the offer might be sold in the first month,” says Filip Žoldák, founding partner of Herrys.

Supply varies from day to day, price developments are difficult to predict.

Herrys data shows that real estate prices have risen by 16% since the start of the year. Up to a quarter of the current offer of apartments are sold at an average price of 4 800 €/m2 excl. VAT. Under these circumstances, further price developments are difficult to predict.

“Our market is currently in a situation where the supply-side crisis is deepening dynamically. These weeks we are also seeing developers respond to the rapid changes in prices for both apartments and building materials by taking available apartments off the market. They usually have pre-sales sorted out to meet the financing bank’s requirements, yet they now often have as much as half the apartment sale contracts signed before the actual construction starts. Now, some of them have decided to wait with the final sales of the remaining apartments,” explains Filip Žoldák.

The secondary market is seeing demand mainly for two-bedroom apartments.

The transactions conducted by the real estate agency HERRYS show that up to 50% of the apartments sold on the secondary market in the third quarter were two-bedroom apartments, with three-bedroom apartments accounting for 36% of sales. The average floor area of apartment was 67 m2. The most popular location was Bratislava III, especially the Nové Mesto locality. While 60% of clients financed the purchase of an apartment by mortgage, up to 40% of clients used solely their own funds. The average mortgage amount in the third quarter was 78% of the property value. The average age of the buyer was 35 years.

“The demand for apartments on the secondary market remains high, the market feels that demand significantly exceeds supply and sellers now have the opportunity to sell their properties for record amounts. Limited supply in new projects has redirected part of demand to the secondary market, which together with the effect of cheap mortgage loans means that the current supply is not sufficient to meet the needs of buyers in the secondary market to a sufficient extent,” says Martin Marsina from Herrys.