Slovakia’s homes sweet homes – but can Covid price hikes keep up as wages stay so low?

Many parts of Slovakia in the past two decades have benefited from a veritable wealth of success.

And now the little big country has reached fourth place in the world ranking of house prices.

A global house price investigation shows that – despite the devastating effect of Covid on jobs and businesses – the cost of a home has gone up by a staggering 15.5 per cent.

This is far higher than the bulk of countries – 55 in all – surveyed by global real estate consultants Frank Knight. The world-wide company reports prices grew by 7.3 percent on average, the most significant spurt since 2006.

The biggest surge in prices was in Turkey, 32 pc, next was New Zealand, 22.1 pc, followed by Luxembourg, 16.6 pc…

And then Slovakia – ahead of the US – at 13.2 pc.

Other V4 countries didn’t do too well, with Czechia and Poland under 9 pc. Hungary was 1.8 pc.

Massive financial stimulus to support economies during the pandemic has led to a boom in the real estate market around the world. But the bubble could burst soon.

To try and avoid this New Zealand has already removed tax incentives.

In the UK things are on the up too with homes in Wales shooting up by 11.9pc to an average of £190,345.

The South of England has fallen behind the rest of the country however. That includes Greater London, where average prices are only 3.1pc higher than last year.

The devouring of city centre properties over the past two decades is starting to hit a famine as people develop an appetite for big, rural properties with gardens.

This is a fundamental change in the kind of homes that buyers are looking for because of the pandemic and working for home.

However, according to Knight Frank, the growth rate of prices will slow down as the impact of lost jobs, the devastation of tourism and service industries and lost businesses hits home.

Earnings too in Slovakia are not keeping pace either. Bratislava for instance is the only region where people receive more than €1,000 a month. In Prešov that drops to around €770.

And when you consider the average price of a two-room flat in Kosice is €128,000 it is difficult to see how the market will develop.

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