Bosnia and Herzegovina's Residential Property Market Analysis 2025

Driven by a persistent imbalance between strong demand for housing, especially in urban areas, and a lack of supply, sales prices and rents in Bosnia and Herzegovina continue to rise.

This extended overview from the Global Property Guide covers key aspects of Bosnia and Herzegovina’s housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

• Housing Market Snapshot
• Demand Highlights
• Supply Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

House prices in Bosnia and Herzegovina continue to rise, driven by a persistent imbalance between housing demand and supply, alongside elevated construction costs, including land, materials, and labor. According to the latest data from the Agency for Statistics of Bosnia and Herzegovina (BHAS), the average price of newly built dwellings sold nationwide increased by 16.58% year-on-year in the fourth quarter of 2024 (14.12% inflation-adjusted), reaching BAM 3,066 (USD 1,643) per square meter.

In Sarajevo, the capital and largest residential market, the average price for new builds stood at BAM 3,694 (USD 1,980) per square meter, marking a 7.63% annual increase. In Banja Luka, the country's second-largest city, prices rose by 9.55% year-on-year to BAM 3,716 (USD 1,991) per square meter.

Bosnia and Herzegovina's house price annual change:

Comprehensive average sale prices that include both new and second-hand homes are not published at the national level. Instead, they are reported separately by the Institute of Statistics of the Federation of Bosnia and Herzegovina (FIS) in the Federation of Bosnia and Herzegovina, and the Republic of Srpska Institute of Statistics (RZS-RS) for Republika Srpska. This reflects the country's decentralized administrative structure, where each of the two main entities maintains its own institutions and statistical frameworks.

Data from both agencies confirms sustained upward trends in key local markets, with the strongest annual growth rates recorded in Mostar (+27.17%), Zenica (+19.80%), and municipalities within the city of Sarajevo.

Sales price dynamics in key submarkets:

As housing prices continue to rise and homeownership becomes increasingly out of reach, particularly for younger households, the House of Representatives approved a VAT reform in late 2024 designed to ease financial pressure on first-time buyers. The measure allows for a refund of the 17% VAT on new residential properties, covering up to 40 square meters for the buyer and an additional 15 square meters for each household member. Finance Minister Srđan Amidžić estimated potential savings of approximately BAM 14,500 (USD 7,771) on a property valued at BAM 100,000 (USD 53,593), describing the initiative as "serious support".

To mitigate the risk of further price inflation in the entry-level segment of the new housing market, the reform includes a cap on eligible property prices. If approved by the upper house, the measure is expected to improve affordability and stimulate demand, particularly among young families.

Demand Highlights:

Activity Remains Strong Amid Divergence Between New and Existing Property Sales

Residential sales activity in Bosnia and Herzegovina remains robust, despite diverging performance trends between the primary and secondary segments. According to the BHAS, a total of 4,299 newly built dwellings were sold nationwide in 2024, marking a 5.19% increase compared to the previous year. The total useful floor area of these dwellings amounted to 233,806 square meters, representing a 6.16% year-on-year increase.

Among key urban markets, Sarajevo recorded 275 newly built property sales, reflecting a 3.38% annual increase. This marks a modest recovery within a generally downward trend observed in recent years. In Banja Luka, the country's second major market, 1,162 newly built properties were sold in 2024, translating to a notable 11.95% year-on-year growth.

Data Source: BHAS.

While aggregate data on total residential transactions across both primary and secondary markets is not available at the national level, disaggregated figures from the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska, provided by the Federal Administration for Geodetic and Real Property Affairs (FGU) and the Republic Authority for Geodetic and Property Affairs (RGURS), offer insight into regional trends.

In Republika Srpska, RGURS reported 8,541 registered residential sales contracts in 2024, a 6.40% decrease year-on-year. Of these, 5,479 contracts were for apartments (a 6.52% decline) and 3,062 for detached houses (a 6.19% decline). Meanwhile, the Federation of Bosnia and Herzegovina recorded a more pronounced annual decrease of 11.37%, with 5,618 residential sales contracts registered. Apartment sales declined by 17.34% to 3,109 units, while detached house sales fell by a more moderate 2.68% to 2,509 units.

Note: The data reflects registered sales contracts for apartments and houses in the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska; the Brčko District is not included. Data Sources: RGURS, FGU.

Most key regional markets followed the national declining trend, with the exception of Zenica, which registered an increase in the number of contracts for both apartments and detached houses. Sarajevo experienced the sharpest decline, with apartment sales down 23.74% and house sales down 21.69% across its core municipalities: Stari Grad, Centar, Novo Sarajevo, and Novi Grad.

Despite the annual declines in transaction volumes, overall market activity remains at healthy levels and continues to perform strongly in the context of the past several years, remaining above the long-term average.

Sales dynamics in key submarkets:

Naida Ćerimagić, Director of the Top Real Estate Agency and President of the Association of Real Estate Brokers at the Chamber of Commerce of the Federation of Bosnia and Herzegovina, notes that differences between the primary and secondary housing markets can be partly explained by the limited supply of attractive properties in the secondary segment. She adds that overall demand for housing remains steady, driven by a combination of factors, including efforts to protect savings from inflation through real estate purchases, as well as favorable bank lending conditions with fixed interest rates, which continue to support households looking for long-term housing solutions.

Overall, real estate continues to be perceived as one of the safest means of preserving savings in Bosnia and Herzegovina. As emphasized by experts from the International Monetary Fund (IMF), low returns on deposits and a relatively underdeveloped financial market leave households and businesses with few investment alternatives beyond real estate, further supporting the sector's resilience.

Supply Highlights:

Elevated Demand Sustains Supply Growth, but Bottlenecks Persist

The residential construction sector in Bosnia and Herzegovina is experiencing steady growth, underpinned by sustained demand for housing, particularly in key urban centers. According to the BHAS, 3,420 dwellings were completed in 2024, representing a year-on-year increase of 17.57%. "This growth trend is driven by continued demand for newly built real estate, especially in larger urban centers, such as Sarajevo, Banja Luka, and Mostar," commented Bloomberg Adria.

At the same time, the number of dwellings under construction rose to 5,479 - an increase of 17.00% compared to the previous year. While this might indicate increases in project launches, industry professionals also point to growing challenges that are affecting project timelines. One of the most pressing issues is the shortage of skilled labor. "An increasing number of qualified construction workers are leaving for the West, where they are offered better working conditions and higher wages, which is slowing down the completion of housing in BiH," writes Herzegovina.info.

High construction costs remain another obstacle. Although prices have stabilized somewhat since the pandemic period, materials such as concrete and steel remain costly. This continues to strain developers' budgets, particularly in the later phases of construction, with many facing liquidity shortages that further delay project completion.

Data Source: BHAS.

Building permit activity - a key indicator of future housing supply - showed limited growth in 2024. The BHAS recorded 11,186 dwellings approved for construction, a modest 1.36% increase year-on-year. However, data from the first two months of 2025 reveals a notable slowdown, with only 1,361 dwellings approved - a decrease of 32.25% compared to the same period last year.

Experts emphasize that inefficiencies in the permitting process remain a major barrier to residential development, with a clear need for improved coordination between public authorities and private sector stakeholders to streamline approvals, accelerate construction timelines, and help stabilize housing prices.

Data Source: BHAS.

Although the residential real estate sector in Bosnia and Herzegovina has shown encouraging momentum, its continued growth will depend on broader economic conditions, inflation trends, and the direction of banking policies. With demand for housing still strong, especially in urban areas, failure to address labor shortages and administrative bottlenecks could further delay completions and add to upward pressure on prices, exacerbating affordability concerns.

Rental Market:

Rental Inflation Exacerbated by Limited Supply

Alongside other post-transition economies in the region, Bosnia and Herzegovina is characterized by a high homeownership rate and a relatively small rental market. According to the BHAS data, as of 2021/22, the share of dwellings in the country occupied by paying tenants was 4.4%, up from 2.7% previously reported in 2015. The market remains largely unregulated, with many private landlords renting out their properties unofficially.

Despite the overall limited size of the rental sector, the demand for rental apartments is strong in larger cities, driven by students and those arriving in urban centers from smaller settlements and rural areas for work. At the backdrop of consistent demand and limited supply of available properties, rental inflation has accelerated in the last few years, with the actual rentals for the housing component of the consumer price index (CPI) reported by the BHAS notably outpacing the growth of the all-items CPI since mid-2023. Most recently, in February 2025, the actual rentals sub-index registered a 9.5% year-on-year growth, while the overall inflation stood at 3.5%.

Bosnia and Herzegovina's rent price index:

According to the current market rents survey conducted by the EUROSTAT in cooperation with real estate agencies in major European cities, in 2023 (the latest available figures), the average monthly rent for quality apartments in Sarajevo (within residential areas of good quality, typically favored by expatriates and professional people) reached BAM 1,200 (USD 663) for 1-bedroom units, BAM 1,700 (USD 940) for 2-bedroom units, and BAM 2,400 (USD 1,327) for 3-bedroom units. For all types of units surveyed, the average rate increased by over 50% within the previous five years.

More recently, in the fall of 2024, Oslobodjenje, a local newspaper, wrote that "finding a quality apartment at a reasonable price [has become] an impossible mission" in larger cities, with students being the most affected category of typical renters. According to the outlet, in larger cities across the country, there are no apartments available for rent under BAM 400 (USD 221).

Local industry specialists cited in the article note that, apart from overall inflation, upward pressure on rents has been put by heightened demand arising from increased sales prices and limited supply, which is further exacerbated by some landlords switching their properties from long-term rentals to more profitable daily rentals. "Prices have gone up and will continue to do so until there are enough apartments on the market," said real estate expert Dino Osmanbegović, quoted by Oslobodjenje.

According to the research conducted by Global Property Guide in April 2025, the average monthly rent in Sarajevo reached 230 EUR for studio units, 271 EUR for 1-bedroom units, 383 EUR for 2-bedroom units, 383 EUR for 3-bedroom units, and 1,023 EUR for larger units with 4 bedrooms or more. In the country's second-largest city, Banja Luka, the average rents were reported at 205 EUR for studio units, 281 EUR for 1-bedroom units, 307 EUR for 2-bedroom units, 435 EUR for 3-bedroom units, and 665 EUR for 4+ bedroom units. The corresponding gross rental yields averaged 4.09% for the capital city and 4.40% for Banja Luka.

Mortgage Market:

Stable Interest Rates and Increasing Lending Volumes

The Central Bank of Bosnia and Herzegovina (CBBH) doesn't conduct traditional monetary policy but functions as a currency board, pegging the national currency to the euro at a fixed exchange rate and holding euro reserves at least equal to the amount of the convertible mark in circulation.

Bosnia and Herzegovina's mortgage loan interest rates (KM / Over 10Y IRF):

With the limited role of the central bank, commercial banks in the country independently determine their lending interest rates based on individual borrowers' financial position, loan value, and the quality of the collateral. Against this background, the rise in interest rates in Bosnia and Herzegovina in the last several years lagged the much faster increases observed in the euro area and other neighboring countries, the lending rates remaining generally flat and close to historical lows, especially for mortgages.

In 2022, the authorities also implemented measures to contain the possible increase in interest rates, initially until end-2023 and subsequently extended to June 2024. At the same time, according to the IMF insights, the banks themselves have been reluctant to increase lending rates, mostly due to fears about asset quality, as well as strong competition among the country's lenders, with anecdotal evidence suggesting the rates would not have been significantly increased even in the absence of restrictions.

Data Source: CBBH.

In February 2025, the CBBH reported the weighted average interest rate on new loans for house purchase at 3.92% (loans in BAM) and 3.94% (loans in BAM indexed to EUR) for loans with the initial rate fixation (IRF) period of over 10 years, the indicators virtually unchanged from their standing in February 2024 and registering only marginal shifts compared to February 2023. A similar dynamic was observed for new loans with other IRF periods.

Weighted average interest rates on new loans for house purchase:

The fact that, beyond deposits, real estate remains the only investment option for many households in the country, coupled with relatively low and stable interest rates, supports the continued growth in new mortgage lending. Based on the CBBH data, the annual value of allocated housing loans to households (including credit for construction, reconstruction, or purchase of homes) increased by 10.2% in 2023 and by 5.1% in 2024, reaching BAM 923.9 million (USD 511.1 million) last year, representing 11.9% of total allocations to households.

Moreover, according to the IMF, the actual volume of lending for home purchase may be underestimated in the official statistics because some of the general-purpose credit is ultimately used to purchase new or existing homes, implying that a portion of real estate-related lending in the country is not collateralized by property.

The total value of outstanding housing loans in Bosnia and Herzegovina increased by 14.1% in 2024 and reached BAM 3.2 billion (USD 1.7 billion) in February 2025. The relative size of the market, however, remains limited, estimated to equal 5.8% of GDP at current prices in 2024, compared to 4.5% a decade ago in 2014. By purpose, the largest share of outstanding credit is represented by loans for the construction or purchase of new housing (62.8%), followed by the purchase of existing housing (36.6%) and the reconstruction of existing housing (0.7%).

Data Source: CBBH.

Socio-Economic Context:

Pick-up in Economic Activity and Escalation of Political Tensions

Economic activity in Bosnia and Herzegovina picked up in 2024, supported by higher revenues from tourism and solid private consumption, which benefited from strong real wage growth, in turn, pushed by declining inflation and high nominal wage increases. According to the IMF figures, the annual real GDP growth reached 2.5% and is projected to accelerate further to 2.8% in 2025. The CBBH projections expect a 2.6% growth this year, while the fall economic forecast from the European Commission anticipates an expansion of 2.4% in 2025, noting that the damage from the October floods will impede stronger growth.

Consumer Price Index (CPI) inflation in the country eased significantly from 14.0% in 2022 to 6.1% in 2023 and 1.7% in 2024. In recent months, the BHAS reporting showed the indicator moderating from the low point of 0.8% in September 2024 to 3.5% in February 2025. Going forward, the European Commission projects headline inflation to remain moderate over the forecast horizon, as price increases for imports, in particular energy, are expected to abate, placing the indicator at 1.8% in 2025, which is in line with the CBBH projection on 1.9%, while the IMF forecast sees the annual inflation reach 2.2% this year.

Data Source: IMF.

The actively growing tourism sector continues to support economic recovery in the country. In 2024, the BHAS reported 1.9 million tourist arrivals (of which nearly 1.4 million foreign tourists), registering a 10.3% increase year-on-year. The total number of nights spent exceeded 4 million (of which 2.8 million were by foreign tourists), an 8.1% increase year-on-year.

Notably, the growth was primarily driven by foreign tourists (showing a 14.8% increase in arrivals and an 11.9% increase in nights spent, against the respective 0.5% and 1.1% increases demonstrated by the domestic segment). The top countries of origin for foreign visitors are Turkey (15.0% of international arrivals), Croatia (12.7%), and Serbia (11.4%).

Data source: BHAS.

The labor market in Bosnia and Herzegovina has tightened over the last few years, with the largest employment gains observed in tourism and trade, and the unemployment rate for the population aged 15-74 declining to 11.7% in Q4 2024 compared to 16.1% three years prior in Q4 2021.

Despite the general downward trajectory, unemployment remains relatively high, especially among women (15.4% in Q4 2024, compared to 9.3% for men during the same period). The country's labor market faces bottlenecks due to high emigration and a shrinking supply of qualified labor, with the IMF's selected issues report pointing out that broader reforms are needed to enhance labor force participation and stem emigration.

"There are indications of a continued outflow of qualified labor, resulting in labor shortages in some sectors, such as construction and health. This is likely to contribute to further wage pressures above productivity growth, with a negative impact on competitiveness," says the European Commission analysis.

Data Source: BHAS.

Looking ahead, the overall economic outlook for Bosnia and Herzegovina is tied to domestic developments following the recent escalation of political tensions in the country, as well as the progression of the EU integration process after the European Council decided to formally open accession negotiations with the candidate country in March 2024.

"A renewed increase in political tensions could result in further delays in important structural reforms. However, growth could also turn out to be stronger, in particular if political cooperation improves or if external demand rebounds stronger than anticipated," said the European Commission forecast.

Sources:

1. Agency for Statistics of Bosnia and Herzegovina (BHAS)
   1. Business Statistics: Prices of New Dwellings Sold in Bosnia and Herzegovina, 4th Quarter 2024: https://bhas.gov.ba/
   2. Business Statistics: Prices of New Dwellings Sold in Bosnia and Herzegovina, 4th Quarter 2023: https://bhas.gov.ba/
   3. Business Statistics: Residential Construction in Bosnia and Herzegovina, January - December 2024: https://bhas.gov.ba/
   4. Business Statistics: Building Permits Issued in BiH, February 2025: https://bhas.gov.ba/
   5. Prices: https://bhas.gov.ba/
   6. Labor Market: https://bhas.gov.ba/
   7. Living Conditions, Income, and Consumption: https://bhas.gov.ba/
   8. Tourism: https://bhas.gov.ba/
2. Central Bank of Bosnia and Herzegovina
   1. Statistics Web Portal CBBH: https://cbbh.ba/
   2. Statistical Appendix: https://cbbh.ba/
   3. Annual Reports: https://cbbh.ba/
3. Institute of Statistics of the Federation of Bosnia and Herzegovina (FIS)
   1. Construction Market Statistics (BS): https://fzs.ba/
4. Republika Srpska Institute of Statistics (RZS-RS)
   1. Construction Market Statistics (SR): http://www3.rzs.rs.ba:8080/
5. Banking Agency of Republika Srpska
   1. Banking Agency of Republika Srpska Issued the Decision on Temporary Measures to Mitigate the Risk of Increase in Interest Rates…: https://abrs.ba/
   2. Decision on Temporary Measures to Mitigate the Risk of an Increase in Interest Rates: https://abrs.ba/
6. Federal Administration for Geodetic and Real Property Affairs (FGU)
   1. Report of Real Estate Market in the Federation of BH for Year 2024: https://fgu.com.ba/
   2. Report of Real Estate Market in the Federation of BH for Year 2023: https://www.fgu.com.ba/
7. Republic Authority for Geodetic and Property Affairs (RGURS)
   1. Annual Report of the Real Estate Market of Republika Srpska, 2024 (SR): https://rcn.rgurs.org/
   2. Annual Report of the Real Estate Market of Republika Srpska, 2023 (SR): https://rcn.rgurs.org/
8. European Commission
   1. EU-Bosnia and Herzegovina Relations: https://enlargement.ec.europa.eu/
   2. Bosnia and Herzegovina Report 2024: https://enlargement.ec.europa.eu/
   3. Autumn 2024 Economic Forecast, Bosnia and Herzegovina: https://economy-finance.ec.europa.eu/
9. EUROSTAT
   1. 2023 Current Market Rents: https://ec.europa.eu/
10. International Monetary Fund (IMF)
    1. Country Overview: Bosnia and Herzegovina: https://www.imf.org/
    2. 2024 Article IV Staff Report: https://www.imf.org/
    3. Bosnia and Herzegovina: Selected Issues, June 2024: https://www.imf.org/
11. Bloomberg Adria
    1. Demand for Apartments Maintains Growth in Construction and Real Estate Prices in BiH (BS): https://ba.bloombergadria.com/
12. Forbes BiH
    1. Prices are Not All That Hurts the Real Estate Market in BiH… (BS): https://forbes.n1info.ba/
13. Politico
    1. Bosnia Tensions Build as Serb Leader is Sentenced for Undermining Peace: https://www.politico.eu/
14. Oslobodjenje
    1. Apartment Rental Prices Have Also Increased Significantly in Bosnia and Herzegovina…(BS): https://www.oslobodjenje.ba/
15. Sarajevo Times
    1. New Decisions to Mitigate Interest Risks in the Federation of BiH: https://sarajevotimes.com/
16. Herzegovina.info
    1. Expansion of Housing Construction in BiH Recorded Growth in the Number of New Apartments… (BS): https://www.hercegovina.info/
17. N1 Bosna i Hercegovina
    1. NIP MP Discusses Impact Of New VAT Refund Law For First-Time Home Buyers: https://n1info.ba/
18. Regfollower
    1. Bosnia and Herzegovina: Lower House Approves VAT Refund on New Residential Properties: https://regfollower.com/
19. Prodaja Nekretnina
    1. Will the VAT on the Purchase of the First Property be Abolished?: https://www.prodaja-nekretnina.com/