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The dragon just got evicted from the castle for failure to make rent.
I recently heard a story about a woman here in Maribor who tried to sell her house and buy an apartment in Ljubljana. After searching for a few weeks she gave up, realizing that she couldn’t afford to move there.
The horror stories from Ljubljana’s real estate market have been steadily increasing since I came here. And with property prices in Slovenia said to be increasing by 10% to 30% annually, I’m sure I’ll hear many more of them in the years to come.
I found this list of property prices in European cities (thanks pirano!) to be a bit shocking. Specifically, I’m surprised that Ljubljana is approaching the likes of Vienna and Berlin. And here it’s important to keep in mind that metropolitan Vienna is bigger than all of Slovenia combined. And it’s especially important to remember that Slovenian wages are about a third of those in Germany.
It’s a problem that’s not just haunting Ljubljana, but the whole country. As some researchers at Maribor University recently pointed out:
Slovenians are paid significantly less than Germans and Italians but are forced to pay only a little less for their goods and services… The convergence of Slovenian prices to those of Germany and Italy is much greater than the convergence of wages.
In other words, Slovenia’s got the worst of both worlds: Western European prices and Eastern European wages. I suppose it’s what the tourist board means when they talk about Slovenia being at “the crossroads of Europe.”
Also worth mentioning: Last year, Channel 4 picked Slovenia as one of the best places to invest in real estate. To be fair, there are indeed some great and generously priced places to be found here. But I wonder if any of them are left in Ljubljana.
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Oh, well… we may be paid less, but we are smarter, funnier, prouder, and better lovers than everybody else. :)))
Tell me something - don’t you think that the official figure for the gross average wage (over 1200 Euros) is somewhat inflated? I mean, according to the link in Michael’s post, the median gross weekly wages in the private sector is 247 Euros, so the monthly wage should be around 1000 Euros. I would expect average wage to be significantly lower and not higher than median wage. In fact to the best of my understanding, a gross monthly salary of 1250+ Euros is considered “good pay”, not the general idea of “average”.
Besides if you look at the rates for personal income tax in Slovenia, a person earning “average wage” falls in the category of the highest taxation rate. This is not what you find in Western European countries.
Well, that’s impossible!!!(tm) cause with Euro convergence we have the same prices as our comrades, and euro salaries as well… -well, that part they missed out, and for a lot of things it’s cheaper to pay trip to Austria and buy-
Speculacija is starting to give its last heartbeats in Spain, so the mafijas have to look for new feeding grounds.
In the next years we will see a lot of empty green spaces become blocks of flats, at a rate that will surpass any population needs. Normal thing will be 60 sq flats for 300000€ -if it isn’t yet-, with the bendition of the government, who will get a nice commision of all this. People will buy flats for x, and sell them 2 yrs later for 2x with no problem, people will get VPO (state-protected houses, for people with few resources) and sell them for the same price… (plus 100000€ in black money)…
Good thing, divorce rate will fall, as a mortgage of 800€ / mo at 40 yrs ties two people together more than marriage.
Then the ministry will announce their “solution”. Flats of 30/40 sq.
Incredibly, this will work, as there is always some nice guy who will pay whatever they ask him. Just to show off, or because he’s tired of fighting. We’ll hear things like “the price of flats never goes down” “you will always be able to sell it for double” etc etc.
But not everything lasts forever, so one day people can no longer pay our friend Euribor (dictated by Germans and their German salaries, paid by everyone and their African ones), so the whole thing will explode.
Ains.. I love the smell of deja vu in the morning…
My uncle used to say that prices are ludicrous because people are stupid enough to pay that amount of money…
But that aside, the problem is two-fold: Firstly, the fact that 90% of apartaments in Slovenia are owned by people living in them (as opposed to Western Europe, where 90% of appartements are rented), thus leaving only 10% of flats to be sold/rented - which obviously drives the price sky-high.
Secondly, the fact that there is disproportionate amount of luxury flats being built (i.e.: not your average dump for young people to buy and start families). If memory serves there are about as much luxury flats being built as there are small, start-up flats. Which is why a sqare metre of a small flat is disproportionatly more expecive than a sq. metre of a luxury flat.
Re: Gross national wage: The figure is about right… The problem is that 2/# of working population earns less than that, and 1/3 earns far more than that. Then there are the 2,5 percent of workers who earn minium wage of some 500 euros.
I am a young professional, working in IT, earning about 1K €/month, single, living with roommates in a rented apartment. My parents and/or grandparents and/or other relatives don’t have the money to buy me a place to live. I can live pretty well on my salary (and save something for the rainy days), but there is no way I can afford buying a flat. Unless, of course, I agree to sell my soul to the bank, paid in monthly installments for the next 50 years.
I hate talking or even thinking about real estate, it can bring me to tears, so I usually carefully avoid the topic.
Pengovsky, are you sure that the ratio is 2/3 and 1/3, and not 4/5 and 1/5?
The Slovenian Government should be flush with funds if the average wage earner pays income taxes at the highest rates. Is it really the case?
I can’t quite figure out what this list shows: is it prices of “high-end” apartments or overall average?
In case of Ljubljana, check out a few offers and see the suburbian dumps that can cost the amount shown in the table. For a new, central, high-end place, one should almost double the price.
Berlin, here we come :S!
BTW M.M., your clock is on London time. And I thought you were all such early birds
According to this press release of the Statistical Office, that is the case. I tend to trust people at SURS
Official statistics compiled by official agencies! As for the press, Michael may have a thing or two to say about the quality of journalism prevalent in the region. Pengovsky, get over your communist hangover and stop taking everything at face value.
As far as journalism in the region is concerned, I tend to agree. Strongly
However, the SURS is surprisingly independent (always was).
The government has other institutions to spin the news of economic miracle that is supposedly happening this side of the Alps
As for my occasional hangover… It’s just alcochol, baby… Communism has nothing to do with it.
You said it Pengovsky! You think of evrything through the haze of alcohol, hence.
Of course… I’ve said it before… Most journalists in Slovenia (even the good ones) are either full blown alcocholics or they are right-wingers. Or they are two-steps-shy of being becoming either of the two…
I find this rant stongly appealing
I hope this time link will work…
Not just appealing. It is true! Sadly…
I too have to limit the amount of time I spend thinking on the issue of housing and affordability. Between my student loans that I owe to the government and the “attractiveness” of my city (Vancouver), there is just about no way in hell that I will ever be able to buy my own place.
It is actually a bit more possible for us to live in Ljubljana (renting a basic flat), we’d be paying about 400 dollars more (at least) for what we currently have if we were in Van. Just wait til you get the Olympics or some other economic “godsend”. That’s when the real fun begins.
Sigh. Bye bye MacGyver, I guess.
I think that link is a little overrated. Well sure there are expensive apartments but we can’t say that all of them are 2500 € per sq. meter or that that is the average.
To quote the incumbent mayor of Ljubljana: “When we build aditional 3000 flats, the average price of a “normal” apartement will fall to 2000 euros per sq. metre”
Yep, that’s why in Spain we build 45000 flats in small cities of 15000 inhabs…
“To quote the incumbent mayor of Ljubljana: “When we build aditional 3000 flats, the average price of a “normalâ€? apartement will fall to 2000 euros per sq. metreâ€?”
Cool… That means a 50sq meter flat will cost only 100.000 EUR. And that means only 625EUR per month to repay the credit for the next 30 years… (and as i have 1200EUR salary, i still have almost 600EUR per months left to live). Can’t wait… but hey, why buy 50, if one can live in 25sq meters appartment?
Damn, gotta marry rich girl…
Will the bubble ever burst? Yeah, probably it will… just when i will save enough money and buy an overpriced appartment…
What is absurd are the price near my home place… Kranjska gora… damn, 3000EUR minimum for a sq meter of a small flat??? And I bet the people that buy those “holliday” flats have a least one of the “national scheme” cheap flats… or they had one, and then they sold it for a double price…
How is it that you can sell a “national scheme” flat (and what does that entail exactly)? Are there no restrictions, or is it just a case of knowing who will turn a blind eye?
..and that’s just talking about the gross salary. Keep in mind that Slovenian taxes are amongst the highest in the world and that they are based on Slovenian, not German average salary. So every poor schmuck trying to buy a house in Slovenia has a MUCH lower net salary to operate with… Of course, mentioning this gets you branded as a right wing reactionist USA loving imperialistic capitalistic pig, but I am fine with that label, been called worse.
I also cannot help but chide the person who does not understand the difference between median and average salary. Of course the average is higher, since the salaries are not limited on the high end, but are certainly limited by a 0 at the low end. Therefore a couple of well-payed people bring the average to a higher number than the median.
Prices in Ljubljana might fall a bit after a connection to the ring from Gorenjska region will be opened at the end of the year.
Now you get an aprox 15 min waiting time at the end of the highway, followed by bottleneck of Celovška street. During rush hour of course.
People might be smart to find good people and make communes. I think it’s a pity that all the sex, drugs, and rock’n'roll ruined communes sometime in the 70’s!
I second Katja!
We should organize alternative co-housing type habitats (see Scandinavia) for people who are willing to share parts of their lives (kids, cars) and keep other parts private (home, work)… so we don’t need to repeat hippy mistakes in order to live together!
With better financing due to large number of people the group can buy better real estate, etc… of course this isn’t as simple as buying your own flat and closing the door to the world. - but it might be a much fuller experience.
som scandinavian social planning could be well used, but if they build flats in LJ, where will people have there not-so-legal gardens??
All I can say to that is: “Get your damn kids off my lawn!”
The real problem is that if wages rise to make property affordable, or higher rents affordable, the overall inflation rate will rise too. But there is a ceiling on inflation “forced” by the Euro (unless you ignore it like everyone else). So Slovenians were not quite so clever by joining the Euro. Other new Member States eg Lithuania can wait till wages have reached a higher level and then join the Euro.