Real estate prices in Sarajevo, as well as in other major cities in Bosnia and Herzegovina, have been continuously growing for years, while solving the housing issue for the majority of citizens has become almost impossible without debt.
However, with high prices and economic uncertainty, it is increasingly questionable how many citizens can get a home loan in general, but also how many of them can withstand the monthly installments in the long term, which often reach the level of one average salary.
Smaller apartments
According to the Director of the Association of Banks of BiH, Edis Ražanica, citizens who are in a position to do so are more and more likely to make a larger contribution in order to reduce the amount of the loan and the monthly installment. At the same time, due to the rise in real estate prices, there is a noticeable trend of buying smaller apartments, especially among young people and families who try to keep installments at an acceptable level.
– Taking into account the average square footage of apartments that citizens most often buy, it can be said that the most common amounts of housing loans are currently between 150,000 KM and 250,000 KM, while for larger family apartments or new buildings in more attractive locations, these amounts can be even higher – said Ražanica for “Avaz“.
Compared to the earlier period, when loans were more often shorter, more and more citizens choose longer repayments in order to reduce the monthly burden and more easily fulfill creditworthiness requirements, explains Ražanica, adding that citizens most often opt for a repayment term of 20 to 25 years.
– Based on the current average interest rates, it can be said that the monthly annuities for housing loans are currently in the range of approximately 600 KM and up to 1,500 KM, depending on the amount of the loan and the repayment period – said Ražanica.
Monthly installments
For example, for a loan of approximately 120,000 KM, the monthly installment is usually between 700 and 750 KM, while for a loan of 150,000 KM, the monthly installment is usually between 800 and 900 KM. For a loan of 200,000 KM, the monthly obligations are usually around 1,000 to 1,200 KM, while for larger loans, such as 250,000 KM, the installments can range from 1,200 to 1,500 KM, depending on the specific conditions.
An example of buying an apartment
– If we look at an apartment with an area of 60 square meters, with a price of approximately 3,500 KM per square meter, the total value of the property would be around 210,000 KM. If we assume that the entire amount is financed with a bank loan, with an interest rate of about 3.7 percent and a repayment period of 25 years, the monthly installment for such a loan would amount to approximately 1,070 KM. Of course, this example is illustrative, and the specific conditions depend on the client’s individual credit profile, income, age, additional obligations and the offer of the individual bank – explained Ražanica.
