Macedonian Housing Market Woes

House prices continue to slip in Macedonia following a brief glimmer of recovery in 2011, according the country’s State Statistical Office. The negative average drop is being driven …

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House prices continue to slip in Macedonia following a brief glimmer of recovery in 2011, according the country’s State Statistical Office. The negative average drop is being driven by price falls in the capital of Skopje, while the rest of the country reported an overall inflation-adjusted gain of 4.9% in property prices in 2012. The government is providing assistance to interested homebuyers and rental yields are performing well, all of which are boosted by low buying prices in the current housing market. Economic growth is expected to improve and that could position the country’s market for a more sustained recovery in the future. For more on this continue reading the following article from Global Property Guide.

The housing market in Macedonia remains weak, after a short-lived recovery in 2011.  During 2012, the average price of dwellings in Macedonia fell by 0.4% y-o-y (0.2% inflation adjusted) to MKD49,941 (€799) per square meter (sq. m.), based on figures from the State Statistical Office. In the second half of 2012, house prices dropped 5.4% from H1 2012.

The price falls are concentrated in the capital city, Skopje:

  • In Skopje, the average price of dwellings dropped by 0.5% (0.12% inflation-adjusted) to MKD58,687 (€939) per sq. m. in 2012 from the previous year.
  • House prices in other parts of Macedonia actually rose by 4.9% (5.5% inflation-adjusted) y-o-y to MKD43,328 (€693) per sq. m. in 2012.

In June 2013, the total number of building permits issued dropped 27.7% to 180 from the same period last year. Likewise, the expected value of the constructions plunged by 83.1% y-o-y to MKD1.51 billion (€24.1 million) over the same period.

On the other hand, loans for house purchases increased 11.5% y-o-y to MKD20.83 billion (€333.4 million) in June 2013 from a year earlier. About 85% were denominated in domestic currency while the remaining 15% were in foreign currency. The size of the mortgage market is just 4.3% of GDP, slightly up from 3.6% of GDP in 2010.

In an effort to help the housing market, the government has increased its subsidies for homebuyers to 75% of the monthly bank mortgage (from an initial 50%) for new flats and houses costing under €900 per sq. m. for the first five years. This means that for a flat with an average price of MKD3.12 million (€50,000), the government will pay a total of MKD937,331 (€15,000) through subsidies.

The National Bank of the Republic of Macedonia (NBRM), the country’s central bank, cut its key interest rate by 25 basis points to 3.5% in Q1 2013, amidst reduced inflationary pressures and lacklustre economic growth. In addition, the government also plans to implement expansionary fiscal policies in the second half of 2013, which include additional low-cost debt funding for SMEs and capital investments.

In 2013, the Macedonian economy is projected to expand by 2.2% at most, driven by growth in export revenues and an increase in investment, according to NBRM. Real GDP declined by 0.3% in 2012, after expanding by 2.9% per year in 2010 and 2011.

A crucial issue is high unemployment. In 2012, the country’s jobless rate stood at 31%, slightly down from 31.4% in 2011 and 32% in 2010, according to the State Statistical Office.

Foreigners from countries which grant reciprocal rights can buy residential property in Macedonia, subject to approval from the Ministry of Justice, but landed property is somewhat more complicated.

This article was republished with permission from Global Property Guide.

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