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Last Updated: Nov 08, 2016




Slovenia’s property market is bouncing back.  Yet though demand has risen substantially, residential construction activity remains down due to a stock overhang, and only the prices of old dwellings are rising, not newbuilds.

The nationwide price of dwellings increased slightly by 0.45% during the year to Q2 2016 (0.69% in real terms), based on figures from the Statistical Office of the Republic of Slovenia. During the latest quarter (Q2 2016) house prices rose by 1.88% (0.15% in real terms).
  • In Ljubljana, Slovenia’s capital, the price index for existing flats rose by 4.23% y-o-y in Q2 2016 (4.49% in real terms). Quarter-on-quarter, the price index increased 1.8% (0.1% in real terms).
  • In the rest of Slovenia, the price index for existing flats increased slightly by 0.66% during the year to Q2 2016 (0.9% in real terms). Quarter-on-quarter, the price index increased 1.7% (stable in real terms).

Demand has surged. In the second quarter of 2016, the number of dwelling transactions rose by 24.3% to 2,789 units from the same period last year, according to the Statistical Office of the Republic of Slovenia. Newbuild transactions rose by 22.8%,  while existing dwelling increased 21.8%.

However, this sharp increase in demand wasn't reflected in housing loans. Lending for house purchases rose just 3.3% to €5.66 billion in September 2o16 from the same period last year, according to the country’s central bank, the Bank of Slovenia. The Central Bank suggests that homebuyers are using their own funds more to purchase real estate, instead of using loans.

Despite this, during the first eight months of 2016, the number of dwelling permits issued for residential buildings dropped 10.1% to 1,547 units, according to the Statistical Office of the Republic of Slovenia. The floor space of dwellings authorized also fell by 10.2% to 237,050 square metres (sq. m.) over the same period.

slovenia house pricesLast year, the economy grew by a modest 2.3%, after a growth of 3.1% in 2014 and contractions of 1.1% in 2013 and 2.7% in 2012, according to the IMF. Slovenia’s economy is expected to expand by 2.3% this year and by another 1.8% in 2017.

Foreigners have been able to buy property since February 2003, on a reciprocal basis. Reciprocity is a principle verified by the Ministry of Justice (MoJ) on the basis of the Law on Reciprocity (Official Gazette No 9/99). Then following accession to the EU in 2004, EU citizens may now buy properties in Slovenia without restrictions.

Analysis of Slovenia Residential Property Market »


RENTAL YIELDS
Last Updated: Jul 11, 2016



Prices and rents of Ljubljana apartments have been virtually static over the past two years. We found that now - in 2016 - the average price per square metre (sq.m.) of apartments in Ljubljana is around EUR 2,650. We found that a 75-sq. m. apartment costs around EUR 192,000 to buy, while a bigger 120-sq. m. apartment can cost as much as EUR 342,000.

The gross monthly rental income per sq. m. is around EUR 10.50. We found that our typical this 80-sq. m. apartment earns around EUR 765 per month, while a 120- sq. m. apartment can earn around EUR 1,260 per month.

The gross rental yield for apartments in Ljubljana, i.e., the gross return on investment in an apartment if fully rented out, ranges from 4.41% to 4.77%.

Round trip transaction costs are low in Slovenia.  See our Property transaction costs analysis in Slovenia and Round-trip property transaction costs in Slovenia, compared to the rest of Europe.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Jul 04, 2016



Rental Income: Nonresident foreigners earning rental income are generally taxed at 25%. A standard deduction of 40% of gross income is available for all taxpayers earning rental income, for income-generating expenses.

Capital Gains: Capital gains realized from the sale of properties are taxed varying rates, depending on how long the owner held the property prior to the sale.

Inheritance: Inheritance of spouses and direct descendants are not taxed in Slovenia. Other heirs are liable to inheritance tax and the applicable progressive rates vary depending on the relationship between the donor and the recipient, and the value of the property.

Residents: Residents are taxed on their worldwide income at progressive rates, from 16% to 50%.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Jul 05, 2016



Roundtrip transaction costs are around 4.434% to 8.26% of the property value. The 2% Transfer Tax is paid by the seller while the real estate agent’s fee at 4% (plus 20% VAT) is typically split between buyer and seller.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Sep 15, 2006



slovenia house for rentRent: Rent and rent increases can be freely negotiated but must be based on the market rate. In theory, rents must not be 50% higher than average rents in the same local municipality. In practice, this is not followed; landlords can draw contracts and change it as they wish.

Tenant Security: If the contract is for a definite period of time, the landlord has no obligation to renew the contract. If there has been no renewal 30 days before contract expiration, the tenant has to vacate the apartment at the day of expiration.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Nov 08, 2016


Modest economic growth, improving public finances

slovenia GDP inflationSlovenia's economy, which is export-dependent, has been sluggish since the beginning of the Euro zone crisis. After growth of 4.2% annually during the good years from 2000 to 2008, the economy contracted by 7.8% in 2009. The economy slightly recovered in 2010 and 2011, with GDP growth rates of 1.2% and 0.6%, respectively. However, in 2012 the economy shrunk 2.7%, followed by another 1.1% economic contraction in 2013.

Last year, the economy grew by a modest 2.3%, after growing by 3.1% in 2014, according to the IMF. Slovenia’s economy is expected to expand by 2.3% this year and by another 1.8% in 2017.

Slovenia’s government budget deficit in in 2015 amounted to €1.03 billion or 2.7% of GDP, sharply down from its deficit of 5% of GDP in 2015, and 15% in 2014, according to Statistical Office of the Republic of Slovenia, and well within the EU’s limit of 3%.

In 2016, the government budget deficit is expected to fall to 2.2% of GDP, and by 2018, to 0.7% of GDP.  Gross public debt is expected to fall to 80.2% of GDP this year, from 83.2% in 2015 and 81% in 2014, according to the European Commission.

Because of these better deficit and debt metrics:
  • Moody’s recently upgraded its outlook on Slovenia’s credit ratings from stable to positive.
  • Fitch upgraded the country’s credit rating in September 2016 from BBB+ to A.
  • Standard & Poor’s upgraded its credit rating in June 2016 from A- to A.

Unemployment stood at 10.7% in September 2016, unchanged from the previous month but an improvement from 11.5% in a year earlier, according to Statistical Office of the Republic of Slovenia. Unemployment increased to an average of 8.9% from 2010 to 2015, from just 6% from 2000 to 2009, according to the IMF.

Inflation stood at 0.6% in October 2016, in contrast with a decline in consumer prices of 0.8% during the same period last year, according to Statistical Office of the Republic of Slovenia.

Slovenia, with a population of about 2 million people, joined the EU in 2004 and the euro in 2007.







  • Pro-landlord rental market
  • Low transaction costs
  • Strong post-transition economy
  • Low to moderate yields in Ljubljana
  • High rental income tax
  • Minor issues w/ ownership
RESIDENTIAL PROPERTY FACTS
Price (sq.m): €2,853 For a 120 sq. m. property, usually an apartment.
Rental Yield: 4.41% For a 120 sq. m. property, usually an apartment.
Rent/month: €1,259 For a 120 sq. m. property.
Income Tax: 15.00% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 14.91% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 10.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice.

Baltics Real Estate Market Overview 2016 - Colliers InternationalPoland Residential Market Q2 2016 REASPoland Residential Market Q3 2016 REAS



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