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Everything you need to know is included in our Slovenia Property Pack
Are you considering buying real estate in Slovenia? Are you questioning whether it's wiser to make a purchase now or hold off until next year?
Each person has their own stance on market timing. The Slovenian real estate agent you consulted might advise you that now is the opportune time to buy property, while your childhood friend from Ljubljana may suggest exercising more patience before making a decision.
At Investropa, when we create articles or update our pack of documents related to the real estate market in Slovenia, we dvocate for a fact-based mindset, rejecting unfounded opinions and baseless rumors.
We have carefully gathered and analyzed official reports and government website statistics. Using this information, we have created a reliable database. Here's what we found that can help you decide whether it's a good time to buy real estate in Slovenia.
Dive in and enjoy!
How is the property market in Slovenia currently?
Slovenia is, today, an extremely stable country
Positive
Stability should be the first thing you look at when you want to invest in real estate because it minimizes risks and provides a secure foundation for your investment. It is an information you need as a foreigner looking to buy a property in Slovenia.
You most likely already know that Slovenia is widely known for its exceptional stability. The last Fragile State Index reported for this country is 26.1, which one of the highest values in the world.
Slovenia's stability today can be attributed to its successful transition from a socialist economy to a market-oriented one, which was facilitated by its accession to the European Union in 2004, providing economic integration and access to broader markets. Additionally, its strong democratic institutions and commitment to the rule of law have fostered political stability and social cohesion, further enhancing its resilience and governance.
Now, let's shift our focus to the economic forecast.
Slovenia will keep growing in the next 5 years
Positive
Before investing in properties, assess the country's economic strength.
Based on the IMF's outlook, Slovenia will end 2024 with a growth rate of 2%, which shows the country is on the right path. Regarding 2025, the figure we're looking at is 2.5%.
Besides that, the economy will keep growing since Slovenia's economy is expected to increase by 11.3% during the next 5 years, resulting in an average GDP growth rate of 2.3%.
The expected sustainable growth rate in Slovenia indicates a stable and healthy economy, which can lead to increased property values and rental demand over time. For real estate investors, this means a greater potential for long-term returns and reduced risk.
In addition, there are other metrics to consider.
Slovenian business owners have a neutral outlook towards market conditions
Neutral
What is the general sentiment of Slovenians about their economy? The GDP forecast may not fully reflect their views. Fortunately, in Slovenia there is a designated metric that is regularly reported. It's not the case for every country, so we're lucky.
The Business Consumer Index (BCI) is a measure of business leaders' confidence in the current and future economic conditions. Surveys and assessments are employed to determine this metric.
According to the Statistical Office of the Republic of Slovenia's data, the latest Business Confidence Index value is 4 for Slovenia. It can be interpreted as a weak score.
There hasn't been significant change, considering that the BCI score, 12 months ago, registered at 2.
Even though the Business Confidence Index (BCI) score is at a minimal level in Slovenia, this shouldn't deter individuals from considering property investments. A minimal score often indicates a temporary phase of uncertainty or caution within the business sector, which is a normal aspect of economic cycles.Therefore, it's crucial to examine other metrics before determining if it's the right time to invest in property in Slovenia.
Slovenia is delivering a lot more building permits
Positive
If you're contemplating purchasing property in a country, it's advisable to consider the number of building permits granted. When more building permits are issued, it suggests a robust and thriving property market.
We have excellent news for you: the number of building permits delivered is exploding in Slovenia.
Over the course of the last year, according to Statistical Office of the Republic of Slovenia, the number of building permits granted by Slovenian local institutions rose by 19.9%, from 4,903 to 5,878 units.
The data here strongly suggests that many people think it's a good time to invest in real estate.
Another important point to note is that there will be an increase in the number of real estate available in the market. Based on this information, it's possible that property prices will decrease in Slovenia in 2025.
Sharp increase in Slovenia's house prices after a period of stagnation
Positive
Slovenia's home prices have increased by 53.9% in 5 years according to Statistical Office of the Republic of Slovenia.
It means that if you had bought a mountain chalet in Bled for $650,000 five years ago, then it would now be worth around $1,000,000.
Recently, there has been a remarkable surge in house prices in Slovenia, marking a significant departure from the preceding period of slow growth.
If you're considering buying a property in Slovenia, that's a good thing. The market is active and growing, which means the real estate sector is strong. However, it's a good idea to think about the timing and maybe wait for prices to go down. By being patient, you could get a better deal on a property, making your investment more valuable.
You can find a more detailed analysis of the real estate prices in our property pack for Slovenia.
Everything you need to know is included in our Slovenia Property Pack
Slovenia's population is growing and getting significantly richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration 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 Slovenia, the average GDP per capita has changed by 11.0% over the last 5 years. It is far superior to the global average. Furthermore, the Slovenian population is growing (+2% in 5 years).
This means that, if you purchase a cozy cottage in Lake Bled 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 Slovenian cities, such as Ljubljana, Maribor, or Bled in 2025.
No high rental yields in Slovenia
Neutral
Rental yield is a standard method to gauge the income potential of real estate investments.
It's the annual rental income of a property divided by its price. For example, if a Slovenian property is purchased for €180,000 and generates €7,200 in annual rental income, the rental yield would be 4%.
Based on the data provided by Numbeo, rental properties in Slovenia promise gross rental yields from 2.2% and 4.9%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Slovenia.
It indicates a moderate level of income generation.
Moreover, as we have seen before, there might be a fall in property prices (due to an increase in supply) and a lot more wealthy tenants, gross rental yields are then very likely to increase in Slovenia in 2025.
Everything you need to know is included in our Slovenia Property Pack
In Slovenia, expect minimal inflationary effect
Neutral
Inflation is the long-term increase in the prices of goods and services.
It's when your go-to plate of štruklji costs 10 euros instead of 8 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.
As indicated by IMF projections, the inflation rate in Slovenia will increase by 1.0% over the next 5 years, with an average annual increase of 0.2%.
This data is telling us that Slovenia is anticipated to experience negligible inflation. Unfortunately, in the absence of inflation, purchasing a property now may not result in substantial price increases or substantial profits in the future.
Is it a good time to buy real estate in Slovenia then?
Let's wrap things up!
Slovenia is a fantastic place to consider buying property in 2025, primarily because it's a very stable country. This stability is a huge plus for anyone looking to invest in real estate, as it means fewer surprises and a more predictable market. When you combine this with the fact that Slovenia's economy is expected to grow by 11.3% over the next five years, averaging a GDP growth rate of 2.3%, it paints a picture of a thriving environment. This kind of economic health often leads to increased property values and a higher demand for rentals, which is music to the ears of any real estate investor.
Another reason to consider investing in Slovenian property is the country's commitment to development, as evidenced by the increase in building permits. This surge in construction activity suggests that Slovenia is preparing for future growth and is keen on meeting the housing demands of its growing population. As more people move to Slovenia and the population becomes wealthier, the demand for housing is likely to rise, which can drive up property prices and rental rates. This scenario offers a promising opportunity for investors looking for long-term returns.
Moreover, Slovenia has experienced a sharp increase in house prices following a period of stagnation. This upward trend is a positive indicator for potential buyers, as it suggests that the market is gaining momentum. For those looking to invest, this could mean getting in at the right time before prices climb even higher. The combination of a growing economy, increased building activity, and rising property values makes Slovenia an attractive option for property investment.
Finally, the rental market in Slovenia is quite promising, with gross rental yields ranging from 2.2% to 4.9%, according to data from Numbeo. This range of yields offers a decent return on investment, especially when considering the minimal inflationary effects expected in Slovenia. With stable economic conditions and a growing population, the rental market is likely to remain strong, providing investors with a reliable income stream. All these factors combined make 2025 an excellent time to consider buying property in Slovenia.
We genuinely hope this article was useful!. If you need to know more, you can check our our pack of documents related to the real estate market in Slovenia.
-Will real estate prices go up in Slovenia?
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.