When web designer Petar Jakovljevic found a cramped two-bedroom apartment close to downtown Belgrade for 70,000 euros (90,000 dollars), he jumped at the chance. It was a good deal in Serbia, where a severe housing shortage is keeping the capital's apartment prices at levels similar to the Paris suburbs while the average Serbian earns less than 400 euros (500 dollars) a month.
Jakovljevic, who has a wife and small child, also considered a larger, old apartment on the run-down Balkan city's outskirts that was selling for the same price per square meter. In the end, they chose the new 35-square-metre flat with elevator and central heating, thinking it's the better investment.
"I think I was extremely lucky," said Jakovljevic, 38. Even as the global financial crisis hits Serbia and apartment prices in neighbouring countries tumble, many Serbs are still prepared pay hundreds of thousands of euros for a downtown Belgrade property.
Experts say the city of 2.1 million lacks some 100,000 apartments and its housing market is narrow and poorly regulated. Meanwhile, financing improved as foreign banks set up shop in Serbia after the Balkan wars of the 1990s and gave out home loans, albeit it high interest rates.
Prices range up to 4,000 euros (5,200 dollars) per square metre for the most desirable new apartments in the posh New Belgrade district. But downtown places - often in crumbling early 20th- century walk-ups without central heating - are not far behind. Even in the ugly, communist-era housing projects on the outskirts, prices are rarely much lower.
Renting an apartment in Belgrade at a reasonable price is hard work at the best of times. In September and October, when university students return, it borders on the impossible. Tighter credit and falling real-estate prices in the rest of eastern Europe have raised hopes this year among potential buyers that Belgrade will become cheaper terrain, too.
Experts at the Colliers International real estate agency say that's unlikely because of housing shortage. "Due to the global crisis, there will be less building, because investors will have difficulty getting the money. So demand and supply will not besignificantly different," said Jovica Jankovic, head of Colliers' Belgrade office.
In contrast, apartment prices in neighbouring Croatia and Bosnia have fallen by 10 to 20 per cent. In Podgorica, capital of Montenegro, prices have halved since a bubble spurred by Russian real -estate investors popped. Housing in the Hungarian capital Budapest, a higher-earning city than Belgrade, goes for about 1,200 euros per square meter.
To buy his place in Belgrade's Vracar district, Jakovljevic scraped up savings, borrowed money privately and sold some family land. He couldn't get a loan because he is not permanently employed. "Furnishing will now have to wait, because I'm broke," he said in an interview.
For many, however, owning an apartment in Belgrade will remain an unfulfilled wish. "I have no idea how people who work for 400 euros a month manage to buy apartments for half a million euros," said Milos, a translator and journalist who asked that his last name not be used. "I've worked my whole life, sometimes two or three jobs, and I still rent a two-room apartment in a suburb where me, my wife and two teen-age sons live."
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