The prices of a square meter of a new apartment have increased by 77 percent compared to the beginning of 2021, when they began their constant growth - from 1.219 euros in the first quarter of 2021 to 2.158 euros in the same period this year. The average net salary has increased from 530 to 1.003 euros in the same four years, or by 89 percent. Both then and now, more than two average salaries are needed for one square meter of an average apartment.
This is shown by comparative data from the Statistical Office Monstat. The installment for an average one-room apartment of 50 square meters, if there were no participation, at the beginning of 2021, at the prices and interest rates of that time, would have amounted to around 410 euros over 20 years, while now it amounts to around 730 euros for the same repayment period. Since the loan installment can amount to a maximum of half of the salary, a roof over the head is equally far away for most employees.
Employees with average earnings would have to have at least a 20 percent share in the purchase of an apartment, so that half of their earnings would go towards repaying the remaining debt. Statistics also show that two-thirds of employees have net earnings that are lower than average, making current apartment prices unattainable for the vast majority of citizens.
Prices were similar from 2011 to 2019.
When, after the global economic crisis of 2008/2009, a mild recovery began in 2010, the price of an average square meter of a new apartment was 1.100 euros and remained at a similar level, with minor oscillations of 10 percent up or down, until the end of 2019. In 2020, with the beginning of the Covid pandemic, the real estate market was blocked, and the average price per square meter fell below 900 euros. In 2021, the price of an average square meter rose to just over 1.200 euros and by the end of 2022 to 1.400 euros.
At the end of 2023, the price per square meter rose to 1.800, in 2024 it reached two thousand, and at the beginning of this year it exceeded 2.150 euros.
The growth in the price of a residential square meter is directly related to the participation of foreigners in their purchase. As foreign direct investment in the purchase of real estate has grown, so has the price of a square meter. Investment by foreigners in the purchase of real estate is becoming increasingly dominant and already exceeds half of total foreign investment.
According to data for the first quarter of this year, the average square meter of a new apartment in commercial sales, at the level of Montenegro, was 2.161 euros, but there were also sales of apartments from solidarity funds where the square meter cost 674 euros. These sales of solidarity apartments lowered the national average by only three euros, which means that it was minor even despite the higher union and pension solidarity fund prices.
Square footage for private individuals 2.071 euros, for unions 674 euros
In Podgorica, the average price per square meter in commercial sales was 2.071 euros in the first quarter of this year. The city also recorded the only sale of solidarity apartments for 674 euros, which brought the overall average for Podgorica down to 2.066 euros.
According to Monstat data on the share of costs in housing construction, in Podgorica, communal equipment (the cost of developing construction land) amounted to 260 euros per square meter of apartment, other participation costs were 184 euros, and the construction costs themselves were 1.627 euros per square meter, including the builder's profit. There were no communal equipment costs for apartments from solidarity funds, because they were exempt from these expenses, and other costs were also zero euros, so only construction costs of 674 euros were included in their price. This means that the construction costs themselves in Podgorica for commercial companies are almost a thousand euros higher per square meter than the amount at which solidarity funds manage to build them.
In the coastal region, the average price per square meter in the first quarter was 2.328 euros, of which 250 euros went to utilities, 1.896 euros to construction, and 182 euros to other costs.
In the central region (excluding Podgorica), for the municipalities of Nikšić, Cetinje, Danilovgrad, Tuzi and Zeta, the average price per square meter of new construction was 1.050 euros, of which 123 euros were for utilities, 837 euros for construction costs and 90 euros for others.
In the northern region, the average price per square meter in this period was 1.209 euros. Here, significant housing construction exists in the winter tourism centers of Kolašin and Žabljak. Of this amount, utility costs account for 190 euros per square meter, the construction itself costs 842 euros, and other costs are 177 euros.
Monstat does not include special tourist-housing projects such as "Porto Montenegro", "Portonovo" and "Luštice Bay" in the average price per square meter of a new apartment, as well as the sale of apartments from the economic citizenship program. The growth in the prices of apartments in the projects had an indirect impact on the growth of real estate in their surroundings, and thus on averages at the regional and national levels.
The growth in average apartment prices has a direct impact on the growth in the amount of annual real estate taxes, because municipal tax offices calculate the amounts published by Monstat for that municipality or region for the starting price of real estate.
The number of requests for housing construction is decreasing
Data from Monstat's reports on issued building permits and work applications for 2024 indicate that the housing market may be reaching saturation point, as investors requested far fewer building permits last year than in previous years. This is the lowest number of housing construction permits issued since the coronavirus pandemic.
Last year, a total of 317 residential construction permits were issued, providing for the construction of 1.500 new apartments.
In 2023, 358 permits were issued for the construction of 2.217 apartments, and in 2022, 368 permits for 2.156 apartments.
In 2021, when the recovery from the coronavirus was still ongoing, 190 permits were issued for the construction of 649 apartments, and in 2020, 224 permits for 1.297 apartments. Most of these permits relate to the period at the beginning of 2020, meaning that their applications were submitted before the outbreak of the pandemic and the collapse of the real estate market.
The record year for issued residential construction permits remained 2017, when there were 1.050 such solutions for the construction of 4.439 apartments. Also in 2014, 2015 and 2016, the construction of about three thousand apartments per year was approved. Last year, that figure was half that, although the price per square meter was 70 to 80 percent higher than in the period 2014-2017.
As long as there is interest from foreigners, prices will rise.
The interlocutor of "Vijesti" from the housing construction industry explains this phenomenon of a decline in interest among apartment builders in 2024 compared to previous years by saying that at the end of 2023 and the beginning of 2024, there was a slight decline in interest from buyers from Russia and Ukraine, after they were the dominant buyers, which is why domestic builders wanted to wait with submitting new requests for building permits until they see how things will develop further.
"However, after that, there was an increase in interest from Turkish buyers in apartments and a smaller increase in the number of domestic buyers who received housing loans. Monstat data also indicate that permits were issued for around 2024 apartments in the first half of 500, and for almost a thousand in the second half of the year. As long as we have an increase in interest from foreigners in buying apartments, we will also have an increase in real estate prices. The main and large developers of residential buildings monitor the situation on the market, and even if there is a decrease in interest from foreign buyers, they reduce construction, so as not to oversaturate the market. There are also some problematic locations where construction is now being carried out on the basis of permits issued several years ago," said the interlocutor of "Vijesti".
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