Skopje, 24 September 2022

The volume of real estate transactions in 2021 significantly exceeded the pre-pandemic level, and housing price growth accelerated and is above the long-term average and long-term trend. In 2021 the housing prices increased by 6.1%, with the growth being more pronounced than in the second half of the year. The growth rate of housing prices in the domestic economy is slightly lower than the average for the European Union, which is 8.3%.

The housing price growth in part reflects supply-side factors, such as rising costs of building materials and the effects of the pandemic on housing supply in the previous year. Namely, due to the pandemic, part of the construction works were postponed, so the supply of completed apartments decreased in 2020, which is already showing growth in 2021. The number of issued building permits also recorded a significant growth, which points to a further increase in supply in the next period as well, in conditions where the number of unsold apartments is also growing.

In 2021 as well, there is a solid growth of housing loans, as one of the sources of financing real estate transactions, which contributes to maintaining the demand in this market segment. Housing loans during 2021 grew by about 14% on average. Favorable financing conditions at low interest rates, as well as the lower risk of housing loans (which have the lowest rate of non-performing loans of 0.6%) are factors that contribute to the growth of housing lending to households.

The developments at the real estate market do not point to a serious increase in the risks to the financial stability related to this segment, but cautious monitoring is necessary. However, the war in Ukraine and the uncertainty it brings about domestic economic activity and inflation are risk factors that could affect the real estate market in the coming period. In the next period, the National Bank will also vigilantly monitor the conditions of the real estate market and the risks associated with it, and is ready to further undertake appropriate macro prudential measures, if deemed necessary to preserve financial stability.