When adjusted for inflation, the average price actually fell by 15.3%, according to house price figures published jointly by the National Bank of Slovakia (NBS) and the National Association of Real Estate Agencies in Slovakia (NARKS).
The Bratislava region, which covers the capital city of the same name, experienced a sharper price fall of 14.23% (16.2% in real terms) y-o-y to Q2 2009. Average prices remained highest in Bratislava at €1,731 per sq. m.
Other regions registered price falls ranging from 3.2% to 23%.
The average price of flats fell 15.3% (17.2% in real terms) to €1,372 per sq. m. in Q2 2009 from a year earlier. The price of flats largely determines the movement of the average price of all property.
On the other hand, the average price of detached houses was €1,156 per sq. m. in Q2 2009, down 9.8% (11.9% in real terms) from the previous year. The price of villas was down by only 0.11% (2.4% real) to €1,777 per sq. m. over the same period.
Property prices in Slovakia had doubled in less than five years, and in some regions price increases were much higher. Strong economic growth, low interest rates, and the anticipation of the adoption of the euro on 1 January 2009 pushed house prices up.
Slovakia’s GDP fell by 5.6% in Q1 and 5.3% in Q2 2009 from a year ago. With the situation expected to stabilize during the second half, the economy is expected to contract by around 5% for the entire 2009.
House price falls are not expected to worsen from now on, except for excessively overvalued areas. However, house prices are unlikely to rise in the next year or so.
There are no legal restrictions on foreigners buying buildings in Slovakia.
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In Bratislava’s less upscale districts (Bratislava II & III) prices per square metre average €1,869, with gross rental yields of between 5.5% and 7.03%.
Effective Tax Rate on Rental Income |
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| Monthly Income | €1,500 | €6,000 | €12,000 |
| Tax Rate | 9.3% | 13.0% | 13.6% |
| Click here to see a worked example | |||
Source:
Disclaimer |
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Capital Gains: Real estate held for more than five years is exempt from capital gains tax.
Inheritance: Inheritance taxes were abolished as of 01 January 2004.
Residents: Personal allowances and certain tax bonuses are available to residents.
Rent: Rent control was abolished in Slovakia from 2007, and previously did not apply to individually-owned apartments.Tenant Security: The tenant can break the contract at any time by giving three months’ notice without needing to give a reason, while the landlord needs substantial reasons to break an ongoing contract.
Slovakia, with a population of 5.5 million, is one of the most successful transition countries in Central Europe with GDP per capita of US$13,857. Established after the nation seceded amiably from Czech Republic in 1993 (the two countries were formerly known as Czechoslovakia), its stable polity and liberal market economy belie its previous 41-year communist rule.
From 1998 to 2004, the economic performance improved dramatically, facilitating the country’s membership of the Organization for Economic Cooperation and Development (OECD) in 2000 and accession to EU and NATO in 2004. In December 2007, Slovakia has become a full member of the Schengen Zone, which allows passport-free travel across the 24-member European nations. In January 2009 Slovakia adopted the euro.
Slovakia’s GDP growth reached an impressive 10.4% in 2007, following 8.2% for 2006, and average growth of 5% from 2001 to 2005. In 2008, real GDP growth slowed down to a still impressive 6.4%, making Slovak Republic the fastest growing economy within the EU and OECD.
Despite the rapid economic growth, unemployment remained relatively high at 8.7% in Q4 2008. However, it was a significant improvement from 19% in 2001. From 2002 to 2008, real private sector wages rose by an average of 9.2% annually – an immense increase in purchasing power.
The budget deficit has been reduced from 10% of GDP in 2000, to just 1.5% of GDP in 2003. It rose to 3.8% in 2006 but declined to 1.9% in 2007. Additional spending to soften the impact of the global recession pushed the deficit up 2.2% of GDP in 2008, still much better to other countries in Europe.
The economy is expected to contract by as much as 5% in 2009. The unemployment rate has risen to 11% in Q2 2009 and is expected to reach 13.6% in 2010. Real wage growth will remain positive but will slow down to 4.2% in 2009 and 1.2% in 2010.
