Market in Depth

House prices are rising strongly in Slovak Republic

Lalaine C. Delmendo | July 15, 2019

House prices in Slovakia continue to rise strongly, with demand buoyed by low interest rates and robust economic growth.

The nationwide average residential property price rose by 7.02% to €1,494 (US$1,698) per square metre (sq. m.) during the year to Q1 2019, following y-o-y rises of 7.57% in Q4 2018, 3.99% in Q3, 4.53% in Q2 and 4.8% in Q1, according to the National Bank of Slovakia (NBS).

When adjusted for inflation, property prices rose by 4.53%. During the latest quarter, property prices increased 2.12% (0.79% in real terms).

Despite this, Slovakia's house prices are still 3.6% below their Q2 2008 peak (-18% in real terms).

In Bratislava region, which has the country's most expensive housing, residential property prices rose by 5.55% y-o-y to €2,053 (US$2,334) per sq. m. during the year to Q1 2019, after rising by 3.84% a year earlier.

All other regions also saw robust house price increases, except Kosice.
  • Nitra experienced the biggest rise of about 27.06% y-o-y to €878 (US$998) per sq. m., a sharp improvement from the previous year's 7.3% growth.
  • In Trencin, house prices rose by 19.49% y-o-y to €895 (US$1,017) per sq. m., up from the prior year's 6.4% increase.
  • In Zilina, house prices increased 18.46% y-o-y to €1,046 (US$1,189) per sq. m. in Q1 2019, more than thrice the growth in the previous year.
  • In Presov, house prices surged 17.71% y-o-y to €977 (US$1,111) per sq. m. – almost 6 times the growth in Q1 2018.
  • In Trnava, house prices rose by 12.4% y-o-y to €1,124 (US$ 1,278) per sq. m., up from an increase of 9.7% in Q1 2018.
  • In Banska Bystrica, house prices increased 5.55% y-o-y to €809 (US$920) per sq. m., a slowdown from a rise of 8.5% a year earlier.
  • In Kosice, house prices fell by 3.54% y-o-y to €1,035 (US$1,177) per sq. m., in contrast to a 7.3% growth in a year earlier

The housing boom in Slovakia lasted from 2006 to Q2 2008. The surge stopped in late 2008, and in following years prices either fell or only increased a little.

House prices in Slovakia are expected to continue rising during the remainder of the year. Property demand, both from local and from foreign investors, is surging, according to local property experts.

Slovakia house prices
That's largely because Slovakia's economy is projected to expand by a robust 3.8% this year, according to the European Commission. Slovakia registered economic growth of 4.1% in 2018, after GDP growth of 3.2% in 2017, 3.1% in 2016, 4.2% in 2015, and 2.8% in 2014. This strong economic growth is likely to continue boosting house prices in the coming years.

There are no legal restrictions on foreigners buying buildings in Slovakia.


Analysis of Slovak Republic Residential Property Market »

Rental Yields

Rental returns are moderate in Bratislava, Slovakia

How much will you earn? Gross rental yields on apartments are moderate in Bratislava, at around 4.5% to 5.4%. To define terms, the gross rental yield is the rent the landlord will earn - before taxation, vacancy costs, and other costs - compared to the purchase price of the property.

The gross rental yield in the Old Town is about 4.5 to 4.5 %, with smaller apartments earning more. Returns are not much different in Ruzinov and in the New Town. The Airbnb market is thriving, but expect damage to your property.

How much do apartments cost? Apartments in the Old Town of Bratislava cost around EUR 2,600 to EUR 3,400 per square metre (sq.m.). In the nearby areas of Nove Mesto, apartments tend to be cheaper, selling for around EUR 2,400 per sq. m. You can ´get into the market´ for EUR 120,000 to EUR 350,000.

How easily will you rent your property? Anecdotally, properties can be quite hard to let. Bratislava is a small place. Few people absolutely need to live in the centre of Bratislava (unlike in other larger cities). The number of expatriates, embassies, and international companies in Bratislava is small, which again restricts the supply of tenants.

Round trip transaction costs are very low on residential property in Slovakia. See our Slovak Republic property transaction costs analysis and our Slovakia transaction costs compared to other locations.

Read Rental Yields »

Taxes and Costs

Rental income tax is moderate in Slovak Republic

Rental Income: Rental incomeis taxed at a flat rate of 19% for income up to €35,022.31, and at a flat rate of 25% on income exceeding €35,022.31.

Capital Gains: Capital gains realized from the sale of real estate are taxed at 19% to 25%.

Capital gains realized from selling properties held for more than five years may be exempted from capital gains tax, subject to certain conditions.

Inheritance: Inheritance taxes were abolished as of 01 January 2004.

Residents: Income and capital gains are taxed at a flat rate of 19% for income up to €35,022.31, and at a flat rate of 25% on income exceeding€35,022.31.

Read Taxes and Costs »

Buying Guide

Roundtrip buying costs are very low in Slovakia

Total roundtrip buy-sell costs are very low, between 4% and 7.60% of property value. The buyer pays for the notary and registration fees, and legal fees. The seller pays for the real estate agent’s fees.

Read Buying Guide »

Landlord and Tenant

Slovak law is neutral between landlord & tenant

slovakia houseRent: 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.

Read Landlord and Tenant »

ECONOMIC GROWTH

Healthy economic growth; falling unemployment

Slovakia is one of Eastern Europe’s most successful transition countries. Born in 1993 after seceding amicably from the Czech Republic (the two countries were formerly known as Czechoslovakia), it has a stable polity and liberal market economy. Slovakia benefited from eight years’ reform under the centre-right coalition led by Mikulas Dzurinda (1998-2004) whose reforms won praise from international organizations, and who oversaw EU and Nato entry.

The economy’s rapid growth facilitated the country’s membership of the Organization for Economic Cooperation and Development (OECD) and the European Union (EU) in 2004. In December 2007 Slovakia became a full member of the Schengen Zone, allowing passport-free travel in the 24-member European nations.

Slovakia gdp inflation
In 2006 Roberto Fico became Prime Minister (prime minister 2006-2010, and 2012 to March 2018), swept in on a victory for the populist Smer party after loudly criticizing the previous right-wing government’s economic, tax, social, pension and legislative reforms. These had been seen as very positive and successful by such international bodies as the IMF, the World Bank and OECD. However they negatively affected large segments of the population, particularly low wage earners, the unemployed, and welfare and other social assistance recipients. While in opposition, and primarily during the election campaign, Fico vowed to reverse the majority of these reforms, but on taking office he adopted a more cautious approach, and Slovakia successfully fulfilled the Maastricht criteria required for Euro currency adoption on 1 January 2009.

Fico conducted virulent campaigns insulting press critics as anti-Slovaks, who in turn produced many revelations of his corruption, including the unexplained wealth of an apparent mistress, his now-secretary Halászová. Fico’s stewardship was marked by tension with Hungary, and populism towards Slovakia’s Roma population and Muslim refugees.

Real GDP growth reached an impressive 10.8% in 2007, following 8.5% growth in 2006. Kia, Volkswagen, and Peugeot Citroen all have built large car plants in Slovakia. In 2008 there was 5.6% growth.

With the crisis there was a 5.4% GDP contraction in 2009. Slovakia’s economy recovered quickly with GDP growth of 5% in 2010, but this was followed by 4 weak years, with 2.8% GDP growth in 2011, 1.7% in 2012, 1.5% in 2013 and 2.8% in 2014.

Slovakia unemployment
In the past four years, the economy bounced back, recording a 4.2% expansion in 2015, 3.1% in 2016, 3.2% in 2017 and another 4.1% in 2018. The Slovakian economy is projected to expand by 3.8% this year and by another 3.4% in 2020, according to the European Commission.

Slovakia’s budget deficit fell to just 0.7% of GDP in 2018, down from 0.8% in 2017, 2.2% in 2016, 2.6% in 2015 and 2.7% in 2013 and 2014. The country is expected to record a deficit of 0.5% of GDP this year, based on projections by the European Commission.

Slovakia’s gross public debt has fallen to 48.9% of GDP in 2018, down from 50.9% in 2017 and 54.7% in 2013, according to the Statistical Office of the Slovak Republic, and is projected to fall further to 47.3% of GDP this year, and to 46% of GDP in 2020.

In May 2019, nationwide inflation stood at 2.7%, up from 2.4% in the previous month, according to the Statistical Office of the Slovak Republic. Inflation is expected at 2.4% this year, from 2.5% in 2018, 1.4% in 2017, -0.5% in 2016, -0.3% in 2015 and -0.1% in 2014.

Unemployment fell to a record low of 6.5% in 2018, from 8.1% in 2017, 9.7% in 2016 and from an annual average of 13.3% from 2009 to 2015, according to the IMF. The jobless rate is expected to fall further to 5.9% this year and to 5.6% in 2020.

Fico resigned the premiership in March 2018, following the murder of investigative journalist Ján Kuciak, who was writing stories on tax frauds and the connections of the Italian mafia ´Ndrangheta to Mária Trošková, an assistant to Fico. However the current ruling government coalition continues, Smer having named as prime minister former Deputy Prime Minister Peter Pellegrini. Fico remains the power behind the throne.

During the March 2019 presidential election, pro-EU opposition candidate Zuzana Caputova beats the government’s Maros Sevcovic, with 58% of the vote. Caputova’s socially-liberal and pro-EU stance will put her at loggerheads with the pro-Russian government when she takes office in June.