This is a dramatic contrast with the rest of Slovenia, where the price of existing flats rose by 3.3% (2.2% in real terms). Slovakia's nationwide house price index fell by only 2% (-3% in real terms) in 2013, and during the fourth quarter of 2013 house prices rose nationally by 1%, or 1.1% when adjusted for inflation, based on figures from the Statistical Office of the Republic of Slovenia. Existing dwelling prices fell by 2.9% in 2013 (-3.9% in real terms), but new-builds were nominally stable (- 1.1% in real terms).
Nationwide, dwelling transactions in Slovenia fell by around 29.1% from 6,226 in 2012 to 4,490 units in 2013. According to the Bank of Slovenia, outstanding loans for house purchase rose by only 0.9% to €5.31 billion during the year to December 2013.
Although dwelling transactions dropped, the number of dwelling permits issued for residential building improved, increasing by 7.5% to 2,553 permits by end of 2013. The floor space of dwellings authorized also increased by 4.3% to 450,620 square metres (sq. m.).
The economy is expected to contract in 2014 by 1.4%, due to weak demand, which is not favourable for the housing market. The economy is expected to slightly recover by about 0.9% in 2015.
Rents are going down. The recent credit rating cuts pushed up the price of mortgage loans, while the difficulties of the banking sector reduced the banks’ willingness to make loans for house-purchases.
Analysis of Slovenia Residential Property Market »
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.
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%.
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.
The economy slightly recovered in 2010 and 2011 by 1.3% and 0.7%, respectively, after shrinking 7.9% during the financial crisis in 2009. However, in 2012 the economy shrunk 2.5%, followed by another 2.6% economic contraction in 2013.
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, a banking crisis, and allegations of corruption.
He was replaced by centre-left opposition leader Alenka Bratusek, the first female premier of Slovenia. Her priorities are 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". However, survival of her coalition government is seen as unlikely
Slovenia’s government deficit in 2013 amounted to €5.178 billion (US$ 7.09 billion) or 14.7% of GDP, according to Statistical Office of the Republic of Slovenia. The high deficit was due to capital injections into banks of about €3.633 billion (US$ 4.98 billion).
In 2014, the budget deficit should be 4.2% of GDP, still higher than the EU’s limit of 3%, according to Slovenia’s statistical office. Public debt is expected to rise from 71.7% of GDP in 2013 to about 80.9% of GDP in 2014.
Unemployment rose to 10.1% in 2013, up from 8.9% in 2012. Inflation at 0.6% in March 2014, was much lower than the 2% recorded during the same period last year.
Slovenia, with a population of about 2 million people, joined the EU in 2004 and the euro in 2007.