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Everything you need to know is included in our Slovakia Property Pack
Are you thinking of investing in property in Slovakia? Are you wondering if it's more advantageous to buy at this moment or defer until next year?
People have different views on market timing. Your Slovak friend may suggest that it's currently a good time to buy property, but your colleague residing in Bratislava might advise waiting for better opportunities.
At Investropa, when we create articles or update our pack of documents related to the real estate market in Slovakia, we facts and data that are backed by evidence, not just opinions or rumors.
After thoroughly analyzing official reports and statistics available on government websites, we have gathered solid information in a database. Here are our findings that can assist you in determining whether it's the right time to invest in real estate in Slovakia.
Let's delve in!
How is the property market in Slovakia currently?
Slovakia remains, today, a very stable country
Positive
Stability promotes property ownership, rental demand, and sustainable growth, making it vital for real estate investments. It is an information you need as a foreigner looking to buy a property in Slovakia.
You most likely already know that Slovakia is widely known for its remarkable stability. The last Fragile State Index reported for this country is 35.3, which is an impressive number.
Slovakia's stability is largely attributed to its integration into European and transatlantic structures, such as the European Union and NATO, which provide economic support and security guarantees. Additionally, its diversified economy, with strong automotive and electronics sectors, coupled with prudent fiscal policies, has fostered economic resilience and social stability.
Stability check done. Now, it's time to review the economic forecast.
Slovakia is poised for strong growth
Positive
Before buying a property, see how well the country's economy is doing.
Based on the IMF's outlook, Slovakia will, in 2024, grow by 2.1%, which indicates the country is heaidng in the right direction. If we take 2025, the figure we're looking at is 2.6%.
Besides that, the economy will keep growing since Slovakia's economy is expected to increase by 11.6% during the next 5 years, resulting in an average GDP growth rate of 2.3%.
The expected sustainable growth rate in Slovakia indicates a stable and growing economy, which can lead to increased demand for real estate as more people and businesses look to settle there. This growth can drive property values up over time, making it a potentially profitable investment for real estate investors.
Now, let's delve into other metrics worth exploring.
Slovak business owners have a neutral outlook towards market conditions
Neutral
The GDP forecast is not enough to fully capture the local sentiment, as it relies solely on external projections and may overlook important factors. Thankfully, in Slovakia there is an established metric that is routinely disclosed. This doesn't apply to every country, so we're in luck.
The Business Consumer Index (BCI) is a metric that quantifies the confidence business leaders have in the economic conditions, encompassing both the present and the future. It relies on surveys and assessments.
The Statistical Office of the Slovak Republic's data indicates that the Business Confidence Index is currently 4 for Slovakia. It is definitely a small score.
There hasn't been significant change, considering that the BCI score, 12 months ago, registered at 1.
The Business Confidence Index in Slovakia is currently at a minimal level. However, this doesn't automatically imply that the property market will collapse. A minimal confidence score often indicates a temporary phase of uncertainty or caution within the business sector, which is a normal part of economic cycles. Therefore, it's crucial to consider other key metrics before deciding if it's a good time to invest in property in Slovakia. Let's proceed.
Slovakian property prices surge with accelerating growth
Positive
Slovakia's home prices have increased by 54.3% in 5 years according to eurostat.
It means that if you had bought an apartment in Bratislava for $300,000 five years ago, then it would now be worth around $463,000.
Recently, property prices in Slovakia have been growing at an accelerating rate. The market has witnessed a surge in property values.
It's a good sign if you're thinking of buying a property in Slovakia. The market is active and experiencing growth. However, it might be wise to wait for a market correction. This way, you can potentially get a better price for your investment.
You can find a more detailed analysis of the real estate prices in our property pack for Slovakia.
Everything you need to know is included in our Slovakia Property Pack
Slovakia's population is getting richer
Positive
When looking to invest in real estate, population growth and GDP per capita should be carefully assessed because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Slovakia, the average GDP per capita has changed by 5.9% over the last 5 years. It's a solid number.
This means that, if you purchase a comfortable apartment in Bratislava and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is likely to go up in Slovak cities, such as Bratislava, Košice, or Žilina in 2025.
Rental yields are not crazy in Slovakia
Neutral
Shifting gears, let's assess the rental yield.
It's the annual rental income of a property divided by its price. For example, if a property in Slovakia is purchased for €200,000 and generates €8,000 in annual rental income, the rental yield would be 4%.
According to Numbeo, rental properties in Slovakia offer gross rental yields ranging from 2.4% and 5.1%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Slovakia.
It means that the income potential from a real estate investment is relatively moderate.
Everything you need to know is included in our Slovakia Property Pack
In Slovakia, inflation is expected to be minimal
Neutral
Inflation is when the amount of money you need to buy things keeps increasing.
It's when your usual bowl of bryndzové halušky costs 7 euros instead of 6 euros a couple of years ago.
If you're considering investing in a property, high inflation can offer you several advantages:
- Property values have a tendency to increase over time, leading to potential capital appreciation.
- Inflation can result in higher rental rates, thereby increasing the cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, effectively preserving the value of the investment.
- Diversifying your portfolio with real estate provides stability during periods of inflation.
- Tax advantages, such as depreciation deductions, can help offset the impact of inflation.
In accordance with IMF projections, over the next 5 years, Slovakia will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
It means that Slovakia will likely experience almost no inflation. If you buy a property now, you may experience lower appreciation potential and reduced returns on investment.
Is it a good time to buy real estate in Slovakia then?
Let's wrap things up!
Slovakia is known for its stability, which makes it an attractive place for potential property buyers. The country's political and social environment has remained steady, providing a sense of security for investors. This stability is crucial when considering long-term investments like real estate, as it reduces the risk of sudden changes that could negatively impact property values. So, if you're thinking about buying property, Slovakia's stable environment is a big plus.
Looking ahead, Slovakia's economy is projected to grow by 11.6% over the next five years, averaging a GDP growth rate of 2.3% annually. This kind of economic growth is a good sign for the real estate market because it often leads to increased demand for housing and commercial spaces. As more people and businesses move to Slovakia to take advantage of its growing economy, the demand for property is likely to rise, which can drive up property values over time. This makes 2025 a potentially great time to invest in Slovakian real estate.
Another factor to consider is that Slovakia's population is becoming wealthier. As people have more disposable income, they are more likely to invest in property, whether for personal use or as an investment. This increase in wealth can lead to a surge in property prices, especially in desirable areas. For investors, this means that buying property in Slovakia could be a smart move, as the value of their investment could increase significantly over time.
Additionally, rental properties in Slovakia offer attractive gross rental yields, ranging from 2.4% to 5.1%, according to Numbeo. This means that if you're considering buying property to rent out, you could see a decent return on your investment. Plus, with inflation expected to remain minimal, the purchasing power of your rental income is less likely to be eroded over time. All these factors combined suggest that 2025 could be an opportune time to buy property in Slovakia.
We hope this article has been helpful!. If you need to know more, you can check our our pack of documents related to the real estate market in Slovakia.
-Will real estate prices go up in Slovakia?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.