Will the loans be more favorable and what are the chances that the prices of square meters will fall?

Will the loans be more favorable and what are the chances that the prices of square meters will fall?

Citizens for whom a loan is the only way to solve the housing issue closely follow the Euribor movement and hope for a drop in interest rates. European bankers should make a decision in the next few days, and domestic financial experts believe that a period of more favorable borrowing is ahead, but they do not predict that the price of square meters will fall in the next period.

The average price of currently advertised apartments for Belgrade on the 4zida website it is 2,640 euros and since the beginning of the year it has recorded an increase of about 40 euros.

Financial consultant and former secretary of the Association of Serbian Banks Vladimir Vasic tells 4zida that a further drop in reference interest rates in the European Union is definitely expected in order to boost demand among citizens, because the economy is very slow.

“On the domestic market, we do not expect anything significant until the end of the year, except for a slight lowering of interest rates, because financial markets do not react so quickly, and on the other hand, inflationary pressure is still simmering, especially in the Balkans.” Only next year in May or June, that wave could spill over here. I am sure that the European Central Bank will lower the reference interest rates several more times. Interest rates on home loans are currently between 5 and 6 percentand I sincerely hope that next year it will fall below 5 percent,” says Vasić.

He notes that, in general, the prices of square meters are not expected to drop, but that everything depends on supply and demand.

“The question is also where you buy, in which city or part of the city. A slight drop in prices is expected somewhere, in some parts of Serbia, but not in Belgrade. “Perhaps somewhere in the settlements on the outskirts of the city, while these central parts hold the price and we have seen that it does not fall, that there are not many oscillations,” says Vasić.

He notes that expensive square footage and high interest rates are two elements that demotivate purchases on credit and that this can be seen through the statistics, which show that the share of home loans in the sale of apartments fell from 31.5 percent in 2021 to 18.2 percent. at the beginning of 2024.

Professor at Singidunum University Nikola Stakić says that the real estate market in our country is an investment one and that interest rates therefore do not have such an effect on real estate prices.

“When four-fifths of your market volume is in cash, then interest rates don’t matter as much as they would if the share of loans was higher. While there is demand for various properties, both potential and existing investors will continue to invest in them and this keeps prices high. They have stagnated for some time, but they are not falling, because the demand still exists,” explains the professor.

Real Estate (Unsplash)

On the other hand, he notes that a drop in the interest rate of half a percent for someone who takes a loan for 30 years can significantly reduce the monthly installment and is of great importance for people for whom a bank loan is the only chance to secure a roof over their heads.

“We haven’t seen a big drop in real estate purchases. Loans did stagnate at some point and there was weaker interest, but this is nowhere near what we expected to happen with such a large increase in interest rates. If there is further easing, there should be an increase in the demand for loans. It is important that now a period of interest rate reduction is looming, and we hope that there will be no major geopolitical changes that could disrupt that trend. Possible new risks would encourage central banks to take a break from loosening those measures,” explains Professor Stakić.

Source: BIZLife/4Zida

Photo: Unsplash/Freepik