Knight Frank, international estate agency and property consultancy with offices in 30 countries on 5 continents, predicts Slovakia and Slovenia to be the Eastern European property hotspots in the year ahead. Liam Bailey, head of Knight Frank Residential Research considers them “two countries with the best potential for further growth”.
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According to Fitch Ratings’ latest analysis, Slovakia should be able to adopt euro in 2009, as planned. Meanwhile, the prospects for the rest of Central Europe joining the single currency have worsened over the last 12 months. Fitch does not see chances for the Czech republic to join before 2011, Poland before 2012 and Hungary by 2014 at earliest. Estonia is expected to be able to adopt euro by 2009/10.
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Bratislava will soon benefit from yet more affordable flights. Wizzair, one of Central Europe’s largest low- cost carriers, will make the city one of its operating bases, launching flights to 13 destinations from Bratislava airport in early 2007 – including London and Cork (Ireland). Bratislava airport is already served by Sky Europe, Ryanair, EasyJet, as well as a number of full-service airlines.
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In spite of rising interest rates mortgages are continuing to see increasing popularity among Slovaks. By 31 June 2006 Slovak banks had provided mortgages in the total sum of SKK 77.3 billion (GBP 1.4 billion). In the first 6 months of 2006 alone, Slovaks took out mortgages of SKK 10.4 billion – an 18.1% increase y/y.
Mortgages continue being affordable despite rates being at their highest since mid 2004 (after three subsequent base rate increases this year mortgage rates range from 6-7%+). Althouh a further rate hike is expected before the end of the year, the industry predicts the mortgage growth to continue, curbed by strong ownership desire of Slovak population and increasing disposable incomes.
Meanwhile, the new government plans to reintroduce the abolished mortgage bonification for young Slovaks. Anyone under the age of 35 and (income) not higher than 1.3 times average income in Slovakia will be able to take advantage of a subsidized mortgage rate. The aim is to enable those on lower incomes and in economically less developed regions to become a home owner.