As opposed to the situation in the neighboring countries, mortgage conditions have improved over the past 6 months in euro-zone Slovakia. Banks are offering government-subsidized mortgage products, preferential interest rates, discounted fees, "mortgage within 24 hours," attractive re-financing options, and gifts like an LCD TV. The result is a lively property market. 100% LTV mortgages are also back. However, financing is no longer so cheap because of the high risk margins of the banks, who can afford high risk margins because the ECB interest rates are low.

The stable economic situation of buyer results in better conditions from the bank. Existing life insurance is a key factor for interest rate subsidies, as well as education, number of children, and in some cases, whether the bank has provided financing for the development in which the applicant wishes to purchase.

Young people under the age of 35 receive a 3% interest rate subsidy if their income does not exceed 1.3 times the average wage of the national economy.

"The banking sector per se is stable," Director of Deloitte Slovensko's consulting department Ivan Luzica said, "the banks are rebounding from the crisis. They are offering new products already - financing of projects or credits," he said. Banks, he said, can afford to come up with new products and services by virtue of the fact that they resorted to hard, restrictive measures at the onset of the crisis.

Currently the financing incentives apply only to local residents. For some reason banks are reluctant to grant loans to foreign buy-to-let investors. This is apt to change this year.

Property prices are expected to increase in the next 2 quarters. Presently the prices in Bratislava stand at 2007 levels, which means approximately 1300 EUR/m2, on average, which includes many large old (difficult to sell) apartments. The average price of 1-bedroom old apartments in Bratislava has dropped from 2043 EUR/m2 in January, 2008, to 1565 EUR/m2 in March 2010. The most significant drop occurred between January 2009 and January 2010.

In case of newly-built 1-bedroom apartments the decrease from January 2009 (2253 EUR/m2) until January 2010 (2046 EUR/m2) has been over 9%. However, in March, 2010, the average price has already climbed to 2058 EUR/m2, and is rising rapidly.

Although this is less prevalent now, there can be as much as 40% difference between the advertized and the real sales price.

Generally there is an atmosphere of optimism in the country. The foreign trade balance continues to show a surplus. According to data released by the Statistics Office, Slovakia had a foreign trade surplus of over ?67 million in February 2010, the SITA newswire reported.

CE Invest continues to offer its property management, rental, and successful resale services on the residential market in Bratislava.

Andras Patkai (CE Invest)

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