Slovenia’s property market remains in deep trouble, as recession looms and political uncertainty continues. House prices are falling. Transactions are low. Construction activity remains down.
During the year to end-Q4 2012, the nationwide house price index plunged by 8.83% (-11.12% inflation-adjusted), the deepest year-on-year decline since Q3 2009, based on figures from the Statistical Office of the Republic of Slovenia. During the latest quarter, house prices dropped 3.54% (-4.42% inflation-adjusted).
The average price of newly built dwellings fell by 13.5% (-15.67% inflation-adjusted) in 2012 from a year earlier while the average price of existing dwellings fell by 6.07% (-8.43% inflation-adjusted) over the same period.
Slovenia’s property market is expected to remain depressed in 2013, as economic conditions worsen. GDP declined by 2.3% in 2012, amidst weakening investment, rising unemployment and faltering domestic consumption. The economy is projected to contract by another 2% in 2013, according to the European Commission.
After booming in early-2000s, Slovenia’s property market weakened in 2008 due to the global economic crisis. The following years were difficult, with house prices falling by 0.17% in 2008 (-3.4% inflation-adjusted), by 8.12% in 2009 (-9.15% inflation-adjusted) and by another 0.15% in 2010 (-1.85% inflation-adjusted). In 2011, house prices increased by 1.37% (-1.07% inflation-adjusted).
Property demand is stagnating. Dwelling transactions dropped 7.9% to 6,336 units in 2012. Dwelling permits issued fell 13.4%. Likewise, the floor space of dwellings authorized dropped 12.9% to 435,719 square metres (sq. m.).
In December 2012, outstanding loans for house purchase increased by just 1.8% to €5.26 billion from the same period last year, according to the Bank of Slovenia.
During the year to end-Q4 2012, the nationwide house price index plunged by 8.83% (-11.12% inflation-adjusted), the deepest year-on-year decline since Q3 2009, based on figures from the Statistical Office of the Republic of Slovenia. During the latest quarter, house prices dropped 3.54% (-4.42% inflation-adjusted).
The average price of newly built dwellings fell by 13.5% (-15.67% inflation-adjusted) in 2012 from a year earlier while the average price of existing dwellings fell by 6.07% (-8.43% inflation-adjusted) over the same period.
- In Ljubljana, Slovenia’s capital, the average price of existing flats dropped 6.35% (-8.7% inflation-adjusted) in 2012 from the previous year.
- In the rest of Slovenia, the average price of existing flats fell by 8.34% (-10.64% inflation-adjusted) y-o-y in 2012.
Slovenia’s property market is expected to remain depressed in 2013, as economic conditions worsen. GDP declined by 2.3% in 2012, amidst weakening investment, rising unemployment and faltering domestic consumption. The economy is projected to contract by another 2% in 2013, according to the European Commission.
After booming in early-2000s, Slovenia’s property market weakened in 2008 due to the global economic crisis. The following years were difficult, with house prices falling by 0.17% in 2008 (-3.4% inflation-adjusted), by 8.12% in 2009 (-9.15% inflation-adjusted) and by another 0.15% in 2010 (-1.85% inflation-adjusted). In 2011, house prices increased by 1.37% (-1.07% inflation-adjusted).
Property demand is stagnating. Dwelling transactions dropped 7.9% to 6,336 units in 2012. Dwelling permits issued fell 13.4%. Likewise, the floor space of dwellings authorized dropped 12.9% to 435,719 square metres (sq. m.).In December 2012, outstanding loans for house purchase increased by just 1.8% to €5.26 billion from the same period last year, according to the Bank of Slovenia.
Analysis of Slovenia Residential Property Market »
RENTAL YIELDS
Last Updated: Jul 29, 2012
Apartments in Ljubljana, the capital of Slovenia, sell for around EUR 2,500 to EUR 2,800 per square metre (sq. m.). Medium-sized apartments tend to cost more, for example, a 90 sq. m. apartment costs on average EUR 2,900 per sq. m., whereas a 200 sq. m. apartment costs EUR 2,500 per sq. m.
Rents range from EUR 9 to EUR 11 per sq. m. per month. The largest apartment you can rent for less than a 1000 Euros in either Ljubljana centre or Bezigrad, is 90 sq. m., which on average, rents out for around EUR 900 per month. If you have twice the budget, you can rent a 200 sq. m. apartment which, on average, rents for around EUR 1,900 per month.
Rents range from EUR 9 to EUR 11 per sq. m. per month. The largest apartment you can rent for less than a 1000 Euros in either Ljubljana centre or Bezigrad, is 90 sq. m., which on average, rents out for around EUR 900 per month. If you have twice the budget, you can rent a 200 sq. m. apartment which, on average, rents for around EUR 1,900 per month.
TAXES AND COSTS
Last Updated: Feb 25, 2013
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 tax is levied at a flat rate of 25%.
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 41%.
Capital Gains: Capital gains tax is levied at a flat rate of 25%.
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 41%.
BUYING GUIDE
Last Updated: Feb 25, 2013
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.
Transaction costs for newly constructed or renovated residential apartment or building is substantially higher because of 8.5% VAT levied in lieu of transfer tax. New apartments intended for rental are considered commercial properties and are subject to 20% VAT.
Transaction costs for newly constructed or renovated residential apartment or building is substantially higher because of 8.5% VAT levied in lieu of transfer tax. New apartments intended for rental are considered commercial properties and are subject to 20% VAT.
LANDLORD AND TENANT
Last Updated: Sep 15, 2006
Rent: 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.
ECONOMIC GROWTH
Last Updated: Mar 24, 2013
Slovenia: struggling economy, political uncertainty
Slovenia has been deeply affected by the ongoing eurozone debt crisis, as it is a small open economy dependent on exports. The economy shrank by 2.3% in 2012, after meagre growth of 0.6% in 2011, 1.2% in 2010, and a contraction of 7.8% in 2009. Slovenia, with a population of about 2 million people, joined the EU in 2004 and the euro in 2007.The Slovenian economy is projected to decline by another 2% in 2013, as domestic consumption and exports continue to decline, according to the European Commission.
Slovenia’s banking sector continues to struggle. The banking system has around €7 billion of bad loans. The country’s two largest state-owned banks, Nova Ljubljanska Banka and Nova Kreditna Banka Maribor had a combined 2012 loss of about €480 million. In addition, Abanka Vipa, the third largest bank, is also struggling to raise capital after two failed attempts.
The budget deficit is expected to be 5.1% in 2013, above the EU’s limit of 3%. Public debt is expected to rise to 63.4% in 2014, from 53.7% in 2012, according to the European Commission.
Wages are falling, and unemployment reached 9.6% in Q4 2012. Inflation was 2.7% in February 2013, down from 2.9% during the same period last year.
Slovenia’s economic situation has been aggravated by political uncertainty. Prime Minister Janez Jansa was ousted by a no-confidence vote on February 28, 2013, amidst economic gloom and banking crisis compounded by allegations of corruption. He was replaced by centre-left opposition leader Alenka Bratusek, the first female premier of Slovenia.
The new government’s priorities will be to “kick-start growth, balance public finances without hampering growth, protecting and developing the public sector and restoring people’s trust in the institutions of the state,” said Bratusek.
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