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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 27.7, which one of the highest values in the world.
Slovenia has a strong economy and a high standard of living, which has enabled it to become one of the most prosperous countries in Central and Eastern Europe. Additionally, the country has a well-established democracy which has allowed it to remain politically stable and secure.
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 2023 with a growth rate of 1.6%, which is encouraging. As for 2024, the figure we're looking at is 2.1%.
The pace will even accelerate since Slovenia's economy is expected to increase by 10.8% during the next 5 years, resulting in an average GDP growth rate of 2.2%.
The expected sustainable growth rate in Slovenia is a good thing for someone who wants to invest in real estate in this country because it indicates a healthy and stable economy which is likely to result in increased demand for real estate, leading to higher returns on investments.
In addition, there are other metrics to consider.
Slovenian business owners have lost some confidence in the economy
Negative
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.
Data shows that, 12 months ago, things were different. Business owners exhibited a notable sense of optimism, reflected in the positive state of the Business Confidence Index (BCI), which stood at 11.
Even if the Business Confidence Index (BCI) score is low in Slovenia, it shouldn't discourage individuals from exploring property investments. A low score typically signifies a temporary period of uncertainty or caution in the business sector, which is a natural part of economic cycles.
That's why it's important look at other metrics before deciding whether it's the right time to buy a property in Slovenia.
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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 2024.
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 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.
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 2024.
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 2024.
Everything you need to know is included in our Slovenia Property Pack
In Slovenia, expect moderate 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 14.6% over the next 5 years, with an average annual increase of 2.9%.
This data is telling us that Slovenia could face inflation in the near future, which would lead to an increase in prices. Consequently, purchasing a property could become more expensive. However, if you buy now, there is a chance that your investment will appreciate, allowing you to sell it at a higher value in the future.
Is it a good time to buy real estate in Slovenia then?
Let's wrap things up!
2024 presents a compelling opportunity for property investment in Slovenia, backed by a range of favorable signals that indicate a conducive environment for real estate endeavors. Slovenia's exceptional stability assures investors of a secure environment for property ownership, minimizing risks and uncertainties.
The projection of sustained growth over the next five years further reinforces the case for property investment. Economic expansion often corresponds with heightened demand for housing and properties, contributing to potential capital appreciation over time.
The significant increase in building permits underscores the potential for increased real estate activity, while the sharp rise in house prices after a period of stagnation indicates a favorable trend toward value appreciation, providing potential gains for investors.
The improving financial status of Slovenia's population contributes to the appeal of property investment. As the population's prosperity increases, the demand for housing and real estate is likely to rise, fostering potential opportunities for both capital appreciation and rental income.
Despite some neutral and negative signals, including moderate rental yields and decreased business confidence among Slovenian business owners, the combination of stability, growth potential, increased building permits, rising property prices, and population prosperity makes 2024 an auspicious year to explore property investment opportunities 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.
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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.
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