The prices of residential real estate in Montenegro continue to rise, even though the prices of construction materials on the international market are falling, and the European Central Bank (ECB) warns of a “chaotic fall” in real estate prices in the eurozone.
– More than 80,000 foreigners, mostly Russians, Ukrainians and Turks, who are significantly wealthier than the average citizen in Montenegro, officially came to Montenegro. They already make up 15% of the population and want to buy real estate. Our current apartment prices for them are very low, so they invest significant amounts of money in their purchase. Now in Podgorica you can’t find an apartment under 1,700 EUR per square meter, and in better locations they are significantly over 2,000 – said the interlocutor.
In a report from June, Monstat stated that the average price per square meter in a new building in Podgorica was EUR 1,580 per square meter.
At the beginning of the pre-crisis year 2019, the price of an average square meter apartment in Podgorica in commercial sales was, according to Monstat, EUR 1,209.
According to that price, an apartment of 50 square meters was worth 60,000 EUR. At that time, according to data from the Central Bank, the average effective interest rate on housing loans was 4.53%. That is, for that value of the apartment, the total debt for the loan, which should be repaid over a period of 20 years, would amount to EUR 91,000, with monthly installments of EUR 382.
Now, with the expected increase in the average price per square meter to EUR 1,700, the value of that apartment has increased to EUR 85,000. The interest rate is now 6.42%, so the total debt for a 20-year loan would be EUR 151,000, and the monthly installment would be EUR 630.
The value of the apartment in four years increased by 25,000, the total amount of debt for the loan by 66,000, and the monthly installment by 250 EUR.
In order to buy this apartment on credit, someone should have a net salary of at least EUR 1,300.
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