The Wealthy Are Buying; the Young Are Giving Up: Sarajevo Faces a Housing Crisis

At the same time, a trend long observed in Western countries is taking hold: the concentration of property ownership in the hands of a relatively small number of individuals.An increasing share of residential property is being owned by fewer people. Real estate agent Spaho Ljajić says this is already a reality in Sarajevo.&quot;It is not uncommon for a single buyer to purchase four or five apartments in a newly constructed building&quot;, Ljajić told Klix.ba.The reason is straightforward: amid inflation and economic uncertainty, real estate has become one of the safest investment options. With limited opportunities to invest in gold or securities in Bosnia and Herzegovina and minimal returns on savings accounts, surplus capital is increasingly being directed into property.Buyers are not only Sarajevo residents. Many property purchasers are wealthy individuals from across Bosnia and Herzegovina, as well as members of the diaspora, who view real estate in the capital as a secure investment. As a result, the supply of housing available to ordinary buyers is shrinking, while prices per square meter continue to rise sharply.The Numbers Are Not on Young People&#39;s SideAccording to estimates from real estate market professionals, around 40 percent of property purchases in Sarajevo are made in cash, while the remaining 60 percent are financed through mortgages. For the average family, however, the financial reality is daunting.The average salary in Sarajevo is approximately 1,700 KM, while the average price per square meter ranges from 4,500 KM to 5,000 KM. This means that purchasing just one square meter of residential space requires nearly three average monthly salaries.Gaps in the Legal FrameworkCurrent regulations effectively favor those who accumulate multiple properties. Unlike countries that apply progressive taxation, where tax rates increase based on the number of properties owned, Sarajevo imposes relatively limited costs on owners of multiple housing units.A property tax of 4 KM per square meter is payable only when a property is officially registered as a rental business. However, many apartments are rented informally and without contracts. For an owner who has invested hundreds of thousands of convertible marks, an annual charge of 280 KM on a 70-square-meter apartment is a negligible expense.Under these conditions, many investors are willing to finance purchases through loans because rental income, even at modest levels, can cover a substantial portion, or even all, of the mortgage payment. Combined with steadily rising property values, this creates a strong incentive to continue purchasing additional housing units as investment assets.There is no official data on the number of individuals who own two or more residential properties. Consequently, it is not possible to provide a reliable comparison of multi-property ownership trends over recent years.Subsidies Are a Drop in the OceanRecognizing the problem, the Sarajevo Canton Government began exploring the introduction of a tax on vacant properties two years ago to encourage owners to place unused apartments on the market.At the same time, the long-running program of housing subsidies for young buyers has proved insufficient. The subsidies are too small relative to current market prices, and many young people remain unable to purchase a home even with government assistance.Outgoing Prime Minister Nihad Uk of Our Party has proposed a social housing model inspired by those used in several Western cities. However, until such measures are implemented, Sarajevo&#39;s housing market is likely to remain out of reach for many prospective buyers.

The Wealthy Are Buying; the Young Are Giving Up: Sarajevo Faces a Housing Crisis

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