Flat prices have recently been breaking records. For a square meter of a property, the price has gone up by almost 30% since last year, reaching 2,729 euros. This record pace applies mostly to cheaper properties. Trenčín has experienced the steepest increase, while Bratislava prices are rising the slowest. The problem is that this growth of real estate prices exceeds the growth of salaries, making housing less accessible for people.
Is this a case of a real estate bubble that’s about to burst? The experts that TREND talked to don’t think so.
The situation is different from the 2008 crisis, the economy is stronger in many aspects. The arrival of Ukrainian refugees fleeing Russian aggression also shuffles the cards. As the demand for housing increases, the probability of prices collapsing is getting lower.
On the other hand, as the year 2008 proved, people never believe the bubble will burst until it does. The more experts assert there is no danger of the bubble bursting, the less careful people are, and the more prices keep going up – making their fall that much greater.
Some of the factors speeding up the rising prices have been the pandemic, building material prices, the long-term shortage of housing supply, the relaxed policy of the European Central Bank, and the underdeveloped rental housing market.
Rent prices have not been keeping up with property prices. Since 2010, rent prices have risen by 16% within the European Union, while property prices are up by 40%. The difference within Slovakia is even more dramatic. While rents have gone up by mere 7%, property prices have increased by 69%.
Cottages: The pandemic reinvigorated the appeal of the countryside, leading to Slovaks buying more cottages than before. With the increase in demand, the prices are going up too – 15 to 20% since last year.
House renovation: Owners of houses built before 2013 will be able to apply for house renovation grants. The green renovation will be financed by the Recovery and Resilience Facility and should help at least 30,000 houses across the country.
Ukrainian refugees may save Slovak labour market
More than 60,000 Ukrainians applying for temporary refuge can be the boost the ageing Slovak labour market needs. Most of the refugees are women and children, and the average age of a Ukrainian worker is 38.8 years – that’s 5.6 years less than the average working Slovak.
However, if Slovakia wants the Ukrainians to stay and help the Slovak labour market, the state needs to provide conditions worth staying for, such as plenty of kindergartens and housing and healthcare support. Otherwise, it’s possible they will travel further west or return home when they get the chance.
The new rules of Lex Ukraine have been a success in providing access to Ukrainians who have applied for temporary refuge.
Unfortunately, there are people who think Ukrainians will steal Slovaks’ jobs. That is completely untrue – the Slovak labour market offers many job positions that have been vacant in the long term. Slovak candidates are either not interested in these positions or they lack the qualifications, for example in the IT sector and healthcare. But there is also a lack of workers in the production and assembly sectors.
Other stories of the week
- Slovak bakers are in a precarious situation – flour is being exported from Slovakia at an uncontrolled pace, pushing the prices up to 600 euros per ton. On top of that, fuel costs are rising and adding to the overall prices of baked goods.
- Unlike the majority of the European Union, where the production of greenhouse emissions hasn’t exceeded the pre-covid levels, Slovakia, thanks to its steel industry, is producing more emissions than before.
- By 2025, every Slovak regional city should have at least one hydrogen filling station. By 2030, there should be 25 of them in the country.
- The far-right Republic party has filed a criminal complaint regarding the donation of the air protection system S-300 to Ukraine. Prime Minister Eduard Heger dismissed any allegations of improper conduct and accused Republic of acting in Russia’s interest.
Thank you for reading.
See you next week.
