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Falling supply of available flats increases prices

The demand for available flats in Bratislava in the first three months of 2016 was higher than the supply.

(Source: SME)

Analysts with Bencont Investments recorded a total of 3,370 available new flats in Bratislava in the first quarter of this year, which is by 2 percent lower than in the end of 2015. As a result, the demand was higher than the supply, which brought about an increase in prices. The price for one square metre of a new flat in Bratislava amounted to €2,317 including VAT on average, up by 2 percent quarter-on-quarter and 9 percent year-on-year.

“The increase in average price of available flats in new buildings is impacted also by the sale of cheaper flats,” Bencont Investments analysts wrote in a press release, adding that only more expensive flats remain on offer.

Another reason is the increasing construction of more expensive flats in better localities where people are willing to pay more for their new dwelling.

While the price of flats increased, the average size of available flats dropped compared to the previous quarter. This means that developers cut space to lure potential customers, offering them a lower total price. The average total price of flats amounted to €156,000 including VAT, which only confirmed the increasing trend in prices in 2015. The total prices, however, are still lower than during the crisis years 2009-2011, the press release reads.

The Bencont Investments analysis also suggests that 887 flats were sold in the beginning of 2016, which is 3 percent less than in the previous quarter. On the other hand, the number is higher than in the crisis years.

The most flats were sold in Bratislava’s Petržalka borough, followed by Bratislava II and IV districts. The sales in the Old Town borough and Bratislava III district were lower than in the previous quarters. The average size of sold flats was 62 square metres, according to Bencont Investments.

Regarding the whole year 2015, the number of sales of flats in new buildings nearly tripled compared to the years 2008-2014. The total number of available flats amounts to 3,300-3,500. Overall 3,840 flats were sold last year. Since it is more than the supply, it means that most new flats added to the offer are sold within two years and only overpriced flats or flats in worse localities remain.

The developers, however, add new projects into the offer about 1-1.5 years before their completion, which causes that if buyers want a new, well-situated flat for better price, they have to wait for one year until they move in, Bencont Investments analysts said.

Their analysis also suggests that the increase in the market of new buildings was caused by the decision to wait with the purchase of a new flat for better market conditions. These are currently ideal mostly thanks to low interest rates.

Despite favourable conditions, the analysts do not expect the sale of flats will increase significantly in 2016.

“It is rather probable that that the sale will slightly drop and will stabilise at around 800 flats,” the press release reads.

Regarding the average price of flats on the market, they expect it will increase.

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Topic: Real Estate


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