Property prices tumbling in region

BELGRADE -- Flat prices in Zagreb and Banja Luka have dropped by 10 to 20 percent.

The price of new flats in Podgorica has been cut by half, Belgrade daily Politika writes.

Only Belgrade is holding firm: prices have leveled out, and are likely to fall by 5-10 percent in the coming year. Nonetheless, the global financial crisis has checked skyrocketing property prices in the capital, says the daily.

However, there will be no dramatic drop in real estate prices, as was the case in the U.S. and parts of Europe, and what reductions there are will be in five to ten percent increments on a yearly basis. There are estimates that demand may fall, but also supply, so the market will not suffer any major upheavals.

Sales have currently ground to a halt, but prices are the same, says Tomislav Sekulović, president of the Real Estate Agents Association. As long as there are five buyers battling for one apartment there is no way prices will drop. Only when the result is 2 to 1 can we expect prices to fall.

Aleksandra Kon, co-owner of Alka Estate Agents, says that the market has calmed down. Both buyers and sellers are keeping their ears to the ground and waiting to see what happens next.

“The prices are calm because we aren’t yet feeling the effects of the world financial crisis that might unsettle the real estate market. True, interest rates have increased, and less and less people will be able to take out loans from banks. But mortgage buyers are usually looking for flats up to EUR 110,000 in value, so, at one point, there could be a surplus of smaller flats. However, that’s not enough to disturb the market and I don’t believe that sellers will drop their prices,” she said.