House prices rising again in Macedonia
Macedonia has been recovering from the crisis. New dwellings in Skopje, Macedonia’s capital, saw 16.6% price rises during the year to H2 2010 (12.3% after inflation), according to the State Statistical Office, after an 7.83% drop in prices of new dwellings during the year to H2 2009 (a fall of 6.40% after inflation).
The year before the crisis, 2008, was a boom year, with a 27% house price rises in Skopje (22% after inflation), as foreign interest surged and the country gained confidence.
In H2 2010:
• Dwellings in Skopje were priced at an average of MKD 65,169 (€1,064) per square metre.
• Other parts of Macedonia had average prices of MKD 45,174 (€737) per square metre, 11.46% higher than in H2 2009 (a rise of 7.4%after inflation).
These price rises are expected to continue as Macedonia’s economic recovery consolidates. Macedonia expects 3% GPD growth in 2011, up from 0.7% in 2010. Macedonia’s GDP expanded by 5.1% y-o-y in Q1 2011. Most impressive was the construction sector, which grew by 21% y-o-y to Q1 2011.
The National Bank of the Republic of Macedonia plans to retain its low key interest rate of 4% as favorable economic condition are expected to continue in H2 2011. To some extent, this may positively affect housing sales, despite Macedonia’s underdeveloped housing finance market.
Despite rapid growth in household lending since 2003, outstanding housing loans were still only 1% of GDP in 2007. In 2010, loans for house purchases were 18% of total loans granted to households.
After winning the Parliamentary elections in June 2011, Prime Minister Gruevski's VMRO-DPMNE party aims to accelerate Macedonia’s campaign to join NATO and the European Union. However, these plans may take a while, because of Macedonia’s unresolved with Greece since 2008 over the use of the name ‘Macedonia’ by a Greek province.
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.
The year before the crisis, 2008, was a boom year, with a 27% house price rises in Skopje (22% after inflation), as foreign interest surged and the country gained confidence.
In H2 2010:
• Dwellings in Skopje were priced at an average of MKD 65,169 (€1,064) per square metre.
• Other parts of Macedonia had average prices of MKD 45,174 (€737) per square metre, 11.46% higher than in H2 2009 (a rise of 7.4%after inflation).
These price rises are expected to continue as Macedonia’s economic recovery consolidates. Macedonia expects 3% GPD growth in 2011, up from 0.7% in 2010. Macedonia’s GDP expanded by 5.1% y-o-y in Q1 2011. Most impressive was the construction sector, which grew by 21% y-o-y to Q1 2011.
The National Bank of the Republic of Macedonia plans to retain its low key interest rate of 4% as favorable economic condition are expected to continue in H2 2011. To some extent, this may positively affect housing sales, despite Macedonia’s underdeveloped housing finance market.
Despite rapid growth in household lending since 2003, outstanding housing loans were still only 1% of GDP in 2007. In 2010, loans for house purchases were 18% of total loans granted to households.
After winning the Parliamentary elections in June 2011, Prime Minister Gruevski's VMRO-DPMNE party aims to accelerate Macedonia’s campaign to join NATO and the European Union. However, these plans may take a while, because of Macedonia’s unresolved with Greece since 2008 over the use of the name ‘Macedonia’ by a Greek province.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.
RENTAL YIELDS
Last Updated: Sep 03, 2011
Buying prices of apartments in Skopje, Macedonia, remain very reasonably price at around 1,100 Euros per square metre.
Due to moderate price rises since 2005 (all our figures are stated in Euro terms), there have been slight declines in yields. Gross rental yields in Skopje are now moderate to good, with most apartments yielding around 7.4% to 8.0%. Houses have better rental yields, at 8.3%
No large price declines or dramatic swings in rents have taken place over the past year. The situation seems stable.
Due to moderate price rises since 2005 (all our figures are stated in Euro terms), there have been slight declines in yields. Gross rental yields in Skopje are now moderate to good, with most apartments yielding around 7.4% to 8.0%. Houses have better rental yields, at 8.3%
No large price declines or dramatic swings in rents have taken place over the past year. The situation seems stable.
TAXES AND COSTS
Last Updated: Mar 14, 2012
Rental Income: Rental income is taxed at a flat rate of 10%. Income-generating expenses and depreciation costs are deductible when calculating taxable income.
Capital Gains: Capital gains are taxed as ordinary income at 10%, levied on 70% of computed gains after expenses are deducted.
Inheritance: Spouses and first degree relatives, or direct ascendants and descendants, are not liable to pay inheritance tax on their inheritance.
Residents: Residents are taxed on their worldwide income at a flat rate of 10%.
Capital Gains: Capital gains are taxed as ordinary income at 10%, levied on 70% of computed gains after expenses are deducted.
Inheritance: Spouses and first degree relatives, or direct ascendants and descendants, are not liable to pay inheritance tax on their inheritance.
Residents: Residents are taxed on their worldwide income at a flat rate of 10%.
BUYING GUIDE
Last Updated: Sep 13, 2011
Roundtrip transaction costs, i.e., the total cost of buying and selling a property, are around 5% - 6.6% of the property value. The 3% sales tax is the greatest cost, and is usually paid by the buyer. The seller pays for the agent’s commission of 2%. However, the first turnover of buildings and apartments is subject to 18% VAT, dramatically increasing the transaction cost.
LANDLORD AND TENANT
Last Updated: Jul 17, 2006
Rent: Rent and rent increases can be freely negotiated. The lease contract must clearly state the rent, type of rental payment, and the payment schedule.
Tenant Security: Lease agreements automatically terminate at expiration of the lease contract.
Tenant Security: Lease agreements automatically terminate at expiration of the lease contract.
ECONOMIC GROWTH
Last Updated: Sep 16, 2011
Macedonia’s economic recovery continues; naming dispute still unresolved
During Q1 2011 Macedonia’s economy had a strong start, with 5.1% annual GDP growth. Macedonia’s economy suffered a slowdown in late 2008, causing the government to cut spending and issue euro-denominated bonds. Unlike neighboring countries, Macedonia’s downturn turned out to be minor (a quick slump of 0.9% in 2009) and the economy returned to 0.7% growth in 2010. “Based on increased exports and investments, the economy next year (2012) will move in positive direction and increase by 4.5%,” said finance minister Zoran Stavreski. “This year (2011) we expect growth of at least 3.5%.”
Although Macedonia was formed without bloodshed after Yugoslavia’s disintegration, it suffered a Greek economic embargo over a dispute about FYR Macedonia's constitutional name and flag. Then an inter-ethnic war broke out between Macedonian Slavs (Orthodox Christians) and ethnic Albanians (Sunni Muslims) in January 2001. This lasted for almost a year, and was resolved through the Ohrid Agreement, pledging improvement of the rights of the Albanian minority through revisions to the constitution in 2001. In 2004, legislation was approved redrawing local boundaries and giving ethnic Albanians greater local autonomy in their areas.
Macedonia’s economic growth averaged 4.6% from 2003 to 2008. However, the dispute with Greece blocked Macedonia’s NATO entry in 2008. It is also hindering accession to the EU, though the country was granted EU candidate status in 2005.
A resolution of the dispute with Greece may be at hand. The Greek government is considering using the name “Northern Macedonia”. Alternatively the name of the Vardar River may be used to distinguish the Republic of Macedonia from Greek Macedonia. The most recent development is the beginning of hearings into the dispute by the International Court of Justice in the Hague, which began in March 2011.
Resolving this issue and quickly jointing EU and NATO is a major focus of the new government led VMRO-DPMNE party, which won the Parliamentary elections in June 2011.
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