Slovenia

Slovenia’s house price growth moderating

Lalaine C. Delmendo

Slovenia’s house price increases are decelerating, amidst falling property demand and weakening residential construction activity. 

During 2023, the nationwide house price index was up by 6.77%, following y-o-y increases of 11.59% in 2022 and 15.77% in 2021, according to figures from the Statistical Office of the Republic of Slovenia. When adjusted for inflation, house prices increased by just 1.4% last year.

On a quarterly basis, nationwide house prices rose by 2.39% in Q4 2023 (2.8% inflation-adjusted).

Slovenia’s house price annual change

During 2023:

  • In Ljubljana, Slovenia’s capital, the price index for existing flats rose by 4.77% y-o-y (but fell slightly by 0.5% in real terms). On a quarterly basis, prices were up by 3.77% (4.19% inflation-adjusted) in Q4 2023.
  • In Maribor, Slovenia’s second-largest city, existing flats prices increased strongly by 8.38% y-o-y (2.93% inflation-adjusted) last year. Quarter-on-quarter, prices were up 2.92% (3.34% inflation-adjusted).
  • In the rest of Slovenia, the prices of existing flats were up by 5.06% (fell by 0.23% when adjusted for inflation) during 2023. On a quarterly basis, the price index rose by a modest 3.1% (3.52% inflation-adjusted) in Q4 2023.

After booming in the early-2000s, Slovenia’s property market weakened in 2008 due to the global economic crisis. The following years were difficult. House prices fell every year till 2014, at least in inflation-adjusted terms.

House prices started to recover in 2015 and have been on a rising trend since then, even during the Covid-19 pandemic in 2020-21. Yet there are signs that housing market growth is slowing due to falling demand.

ANNUAL HOUSE PRICE CHANGE IN SLOVENIA, 2008-2023
Year Nominal Inflation-adjusted
2008 -0.16 -3.40
2009 -8.12 -9.14
2010 -0.15 -1.80
2011 1.37 -1.07
2012 -8.83 -11.12
2013 -4.38 -5.42
2014 -4.39 -4.30
2015 0.05 0.64
2016 6.89 6.27
2017 9.87 8.44
2018 8.27 6.28
2019 4.83 3.23
2020 5.17 5.92
2021 15.77 11.14
2022 11.59 1.40
2023 6.77 1.40
Sources: Statistical Office of the Republic of Slovenia, Global Property Guide

Property demand is plummeting. In 2023, the total number of dwelling transactions fell sharply by 24% from a year earlier, to 9,786 units, following an annual decline of 7.6% in 2022 and a growth of 19.9% in 2021, according to the Statistical Office of the Republic of Slovenia. In terms of transaction value, dwelling sales stood at €1.39 billion in 2023, down by 18.9% from a year earlier.

Similar to local demand, foreign demand is also weak despite liberal foreign homeownership rules. Foreigners have been able to buy property since February 2003, on a reciprocal basis. Reciprocity is a principle verified by the Ministry of Justice (MoJ) based on the Law on Reciprocity (Official Gazette No 9/99). Then following accession to the EU in 2004, EU citizens may now buy properties in Slovenia without restrictions.

Due to high-interest rates, the residential mortgage market is also slowing. In February 2024, total lending for house purchases was up by a minuscule 0.9% y-o-y to €8.29 billion, based on figures from the Bank of Slovenia.

Residential construction activity is also weakening. In 2023, dwelling permits issued rose by 6.7% y-o-y to 5,441 units, a slowdown from annual increases of 21.8% in 2022, 14.9% in 2021, and 11.6% in 2020. In the first two months of 2024, the number of dwellings for which permits were issued plunged by 38.9% to just 662 units.

During 2023, Slovenia’s economy grew by a meager 1.3%, a slowdown from annual expansions of 2.5% in 2022 and 8.2% in 2021, as the country feels the brunt of the global economic uncertainty and geopolitical tensions, including the war in Ukraine, aggravated by the adverse impact of the devastating floods in August 2023.

The European Commission expects the Slovenian economy to expand by 1.9% this year, before improving to 2.7% in 2025. The IMF is a bit more optimistic, projecting a real GDP growth rate of 2.2% this year and another 2.6% in the following year.

Slovenia Price Indices for Existing Flats Annual Change graph

Stronger price hikes on newly-built properties

Newly-built dwellings are currently rising in value faster than existing dwellings, in annual terms. In 2023, the price index of newly built dwellings rose by 8.36% (2.92% inflation-adjusted) from a year earlier. Quarter-on-quarter, prices were also up by 3.03% (3.45% inflation-adjusted) in Q4 2023.

  • The newly-built flats price index rose by 8.03% (2.59% inflation-adjusted) during 2023. The index increased 3.51% (3.93% inflation-adjusted) from the previous quarter.
  • The newly-built family houses price index soared by 9.53% y-o-y (4.02% inflation-adjusted) in 2023. On a quarterly basis, the index increased slightly by 1.42% (1.83% inflation-adjusted) in Q4 2023.

The values of existing dwellings are also rising, albeit at a slower pace, increasing by 6.62% y-o-y in 2023 (1.26% inflation-adjusted). On a quarterly basis, newly built dwellings rose by 2.33% (2.74% inflation-adjusted) in Q4 2023.

  • The existing flats price index increased by 5.86% y-o-y (0.54% inflation-adjusted) in 2023 and was up by 3.62% (4.04% inflation-adjusted) during the latest quarter.
  • The existing family houses price index rose by 7.9% y-o-y (2.48% inflation-adjusted) in 2023 and was barely up by 0.22% (0.63% inflation-adjusted) during the latest quarter.

Slovenia House Price Indices by Type graph

Demand is falling rapidly

During 2023, the total number of dwelling transactions fell sharply by 24% from a year earlier, to 9,786 units, following an annual decline of 7.6% in 2022 and a growth of 19.9% in 2021, according to the Statistical Office of the Republic of Slovenia.

By property type, in 2023:

  • Existing dwelling transactions fell by 24% to 9,461 units in 2023 from a year earlier. Transactions of existing flats, which accounted for more than 56% of total dwelling transactions, were down by 22% in 2023 from the previous year. Likewise, existing family house transactions also dropped by 24.5%.
  • Newly-built dwelling transactions, which account for less than 4% of total transactions, fell by a huge 43.1% y-o-y to 325 units in 2023. Transactions of newly built flats and family houses plunged by 37.2% and 64%, respectively, over the same period.

Slovenia Newly Built Dwellings Number of Transactions graph

In terms of transaction value, dwelling sales stood at €1.39 billion in 2023, down by 18.9% from a year earlier. Existing dwelling sales, which accounted for 93.5% of the total value of transactions, dropped by 17.6% while newly-built dwellings sales plunged by 33.3%.

Slovenia Existing Dwellings Total Number of Transactions graph

Residential construction activity weakening

During 2023, the total number of dwellings for which building permits were issued rose by 6.7% to 5,441 units from a year earlier, a slowdown from annual increases of 21.8% in 2022, 14.9% in 2021, and 11.6% in 2020, according to the Statistical Office of the Republic of Slovenia. Likewise, the useful floor area of dwellings also increased by 4.5% y-o-y to 686,263 sq. m. last year.

Of Slovenia’s twelve statistical regions, nine saw year-on-year increases in the number of dwellings for which permits were issued.

Primorsko-notranjska registered the biggest year-on-year increase of a whopping 176.1% in 2023, followed by Zasavska with a 103.8% growth. Other regions that experienced a rise in dwelling permits issued included Koroška, with 25.7% growth, Osrednjeslovenska (22.3%), Podravska (18.3%), Posavska (16.5%), Gorenjska (9.4%), Goriška (7.3%), and Pomurska (7.2%).

In contrast, Jugovzhodna Slovenija recorded the biggest year-on-year decline in dwelling permits of 30%, followed by Savinjska (-28%) and Obalno-kraška (-10.6%).

Residential construction activity continues to weaken this year. In the first two months of 2024, the number of dwellings for which permits were issued plunged by 38.9% to just 662 units as compared to the same period last year. Likewise, the total useful floor area of dwellings also dropped sharply by 32.1% y-o-y to 83,782 sq. m from a year ago.

Slovenia Number of Dwellings with Building Permits graph

Mortgage interest rates soaring

Following the European Central Bank’s move to successively raise its key interest rates to rein in inflationary pressures in the European Union, mortgage interest rates in Slovenia have been rising rapidly in the past two years. Currently, the ECB repo rate stands at 4.5%, a cumulative rate hike of 450 basis points from a record low of 0.0% in June 2022.

As a result, mortgage interest rates in Slovenia are now rising rapidly. In February 2024:

  • Floating and initial rate fixation (IRF) of up to 1 year: 5.22%, sharply up from 4.59% in February 2023 and just 1.56% in February 2022
  • IRF over 1 and up to 5 years: 3.83%, up from 3.56% in the previous year and 1.76% two years ago
  • IRF over 5 years and up to 10 years: 3.71%, slightly down from 3.79% a year earlier but still far higher than the 1.66% two years ago
  • IRF over 10 years: 3.86%, down from 4.01% in the previous year but still up from 1.73% two years earlier

Slovenia Housing Loans Interest Rates graph

The mortgage market remains underdeveloped

Slovenia’s mortgage market has expanded from 7.6% of GDP in 2007 to about 13.2% of GDP in 2023. It has been held back by structural problems - the underdeveloped land registration system, weak foreclosure procedures, and other problems of the legal environment.

Slovenia Housing Loans Outstanding graph

Due to rising interest rates, housing loan growth has been decelerating fast. During 2023, the total amount of outstanding housing loans rose by a minuscule 0.7%, a sharp slowdown from an annual increase of 9.8% in 2022 and 9% in 2021. Before this, housing loans grew by an annual average of 3.6% from 2011 to 2020.

In February 2024, total lending for house purchases was up slightly by 0.9% to €8.29 billion as compared to the same period last year, based on figures from the Bank of Slovenia.

  • Loans for house purchases denominated in domestic currency rose slightly by 1.2% y-o-y to €8.13 billion in February 2024.
  • Loans for house purchases denominated in foreign currency, on the other hand, fell by 13.1% y-o-y to €159 million over the same period.

Slovenia’s banking sector is dominated by state-owned banks which control more than 40% of the market, while France’s Societe Generale, Italy’s Unicredit, and several Austrian banks are also present in the market.

Slovenia New Housing Loans Composition graph

Moderate rental yields

Gross rental yields on apartments are moderate in Slovenia, averaging 4.45% in Q1 2024, slightly up from 4.4% in Q2 2023, according to research conducted by the Global Property Guide in February 2024. 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.

In Q1 2024, two-bedroom apartments in Ljubljana city center cost €490,000, on average. In the nearby areas, apartments tend to be cheaper, selling for around €299,500 for a similar two-bedroom apartment.

In Ljubljana’s city center, a one-bedroom apartment can be rented at around €1,100 per month, while the two-bedroom apartment has an average monthly rent of about €2,350. Bigger apartments with at least three bedrooms are rented out for at least €2,900.

Round-trip transaction costs are low in Slovenia. See our Buying Guide for Slovenia.

Economic growth slows

During 2023, Slovenia’s economy grew by a meager 1.3% from a year earlier, a slowdown from annual expansions of 2.5% in 2022 and 8.2% in 2021, as the country feels the brunt of the global economic uncertainty and geopolitical tensions, including the war in Ukraine, aggravated by the adverse impact of the devastating floods in August 2023.

“Slovenia’s economy recovered well from the pandemic, only to be hit by spillovers from the war in Ukraine. After a strong recovery in 2021, growth slowed in 2022 because of adverse energy price spillovers from the war in Ukraine and supply chain disruptions,” said the International Monetary Fund (IMF). “Growth is estimated to have fallen further last year to less than 1½ percent, reflecting subdued consumption, the unwinding of inventories, and weaker growth in trading partners.”

After continuously posting modest growth of an average of 3.5% annually from 2014 to 2019, the economy suffered a pandemic-induced contraction of 4.2% in 2020.

Slovenia Real GDP Growth and Inflation Rate graph

The European Commission expects the Slovenian economy to expand by 1.9% this year, before improving to 2.7% in 2025. The IMF is a bit more optimistic, projecting a real GDP growth rate of 2.2% this year and another 2.6% in the following year.

“Weak sentiment and low export demand are expected to limit growth at the beginning of 2024. With continued strong investment, also supported by the RRP, and recovery of demand in export markets, growth is projected to improve over the forecast horizon,” said the European Commission. “Private and public consumption are expected to pick up thanks to the continued strong labor market performance and increasing wages.”

Annual inflation stood at 3.6% in March 2023, slightly up from 3.4% in the previous month but far lower than the 10.5% seen a year earlier, according to the Statistical Office of the Republic of Slovenia. Consumer prices during the period were influenced the most by seasonal changes in clothing and footwear.

Nationwide inflation had been averaging just 1.2% annually from 2010 to 2021 before surging to 8.8% in 2022 and 7.4% in 2023.

The labor market remains stable. In Q4 2023, nationwide unemployment was 3.4%, down from 3.9% in the previous quarter and from 3.5% from the same period in the prior year. The country’s jobless rate was higher among women at 3.6% as compared to men at 3.2%.

From an annual average of 8.5% from 2010 to 2017, the unemployment rate fell to 4.5% from 2018 to 2023.

There were about 35,000 unemployed people in Slovenia in Q4 2024, down by 12.7% from the previous quarter but at par with the same period last year.

During the April 2022 parliamentary elections, Robert Golob won a surprise victory over veteran right-wing populist Prime Minister Janez Jansa. His green Freedom Movement formed a three-way center-left coalition with the Social Democrats and the Left. Golob pledged to reform politics in the country and focus on addressing problems in healthcare and containing rising energy and food prices.

Later during the same year, Natasa Pirc Musar became Slovenia’s first female president by winning 54% of the votes cast in the second round of the presidential elections held on November 13, 2022. The role of a president is largely ceremonial but holds authority in the country’s foreign affairs and defense.

Slovenia Unemployment Percentage graph

Sources:

Slovenia - More data and information