COMMENT: Survey finds 2 out of 10 in CEE intend to buy property

By bne IntelliNews May 22, 2008

Martin Mayr of UniCredit -

A region-wide market research study was conducted to investigate current living standards as well as intentions to purchase real estate in the CEE region. In each of the 12 countries of the region - Russia, Ukraine, Poland, Czech and Slovak Republics, Hungary, Romania, Bulgaria, Slovenia, Croatia, Bosnia and Herzego- vina and Serbia - at least 1,000 interviews were conducted. The samples were representative for those aged 15 years and above. All interviews were conducted as personal face-to face interviews by Bank Austria's long-term partner agencies (GfK, RmPlus, TNS). The questionnaire contained questions about current living conditions (house/flat; ownership, size of living space), intended purchases of real estate (any plans, when to buy, purpose of purchasing) and finally how this purchase should be financed (loan, savings, gift/in- heritance, building societies).

On average, more than one in every two respondents (56%) said they lived in a house (detached, semi-detached) only 44% live in flats. However, the results in individual countries deviate quite significantly from these averages: Bosnians (75%), Serbs (71%), Hungarians (70%) live in houses more frequently, while people living in flats were overrepresented in Russia (84%), Ukraine (63%), Poland (58%), Czech Republic (53%) and Romania (52%). In all countries - not surprisingly - flat users were found more often in the larger cities, while in small towns and especially villages the majority live in their own house.

Home ownership is high

A relatively small number of respondents (11% on average) claimed to pay rent for their house or flat, while about one quarter live "for free" in property owned by someone else (mainly family members like parents, grand-parents, etc.). About two-thirds of the interviewees are also owners of the houses or flats they live in. Most owners were found in Ukraine (85%), Hungary (83%) and Romania (78%), while renting is most popular in the Czech Republic (26%) and Poland (21%). Russia (32%), Bosnia (33%) and Slovakia (33%) had the highest proportion of people still staying with their families.

Despite the relatively high level of home ownership, the results suggest that there is still potential demand for new housing construction and renovation in the mid- to long term. 19% of interviewees are planning to buy their own real estate property: one-third plan to do so in the next three years, and another third in the next 10 years or later. Above-average figures were recorded for Romanians (25%), Croats (24%) and Slovenes (23%) expressing their intentions to invest in new real estate property, while the weakest intentions for buying a new flat or house were found among interviewees from Bulgaria (15%), Bosnia (16%) and Ukraine (10%). Romanians also showed the strongest desire to buy a flat/house very soon, ie. in the next three years, at 11% of the adult population. Apart from the regional differences, age was found to have a signifi-cant impact as well. In all countries, the number of people less than 40 years old intending to buy a flat or house was two to four times higher than in the age-group of those aged 40 years and older.

However, again there was a wide range of results in the individual countries: while in Slovenia, Slovakia or Poland only 20% or even less of potential buyers are more than 40 years old, the respective scores in Ukraine, Romania, Bulgaria and Serbia was close to or even above 30%.

As expected, the majority of those intending to buy a new house/flat plan to use this new property as their main residence (88%), while 5% consider the purchase of the flat/house as a means of investment (speculative) and another 5% as a second house. The motivation to buy real estate for investment reasons only was identified more often in Serbia (9%), Croatia (8%) and Bulgaria (7%), but barely in Poland (2%) and Bosnia and Herzegovina (2%). On the other hand, more Croats (8%), Ukrainians (7%), Slovenians and Bulgarians (6% each) are planning to invest in a second residence.

Demand is linked to income

There is also a clear trend that respondents in the upper income third expressed a significantly higher intention to acquire a flat or house not only as a main residence but rather as an investment. Again, this trend was found significantly more often in Croatia and Romania.

In terms of the ways of financing real estate investments, across the whole region bank loans were mentioned by the majority as the single alternative they are considering (65%). Every seventh respondent is planning to invest the profits earned from selling their current house or flat into purchasing a new one. Every fifth potential buyer is speculating on financial support from family, relatives or friends in the form of gifts or inheritances. Own savings were mentioned by one third on average, other sources of financing by 6% (mainly building society savings and loans). Again, significant regional differences were noted from the average scores in this context as well. As for loans, the Slovenes, Croats and Hungarians expressed the strongest intention to finance the new property with a loan (each over 70%), while this was considered less of an option in Poland (58%), Bosnia (57%), Russia (59%) and Ukraine (33%). Savings on the other hand are available more often in the wealthier countries such as the Czech and Slovak Republics, Slove- nia and Hungary (with the exception of Ukraine which shows a higher propensity to use savings compared to other lower-income Eastern European countries). In these countries, expectations of inheriting money from their parent's generation, which can be used for buying a new house or flat, are significantly higher. Finally, in the Czech and Slovak Republics the use of building society products are much more popular than in other markets too (14% and 10% respectively).

On average, each potential buyer of real estate is contemplating using 1.3 different sources for financing purchases. Czechs, Slovaks, Hungarians and Slovenians (the four "wealthy" countries) seem to have significantly more financial sources than their counterparts in the remaining countries. While potential buyers in these four countries have access to between 1.4 to 1.6 different possibilities for financing their new flat or house, the respective figures for Russia or Bosnia are barely above 1.0. Analysing answers by age, it seems quite obvious that older people - especially in Southeast countries (HR, BG, BiH, SRB and RO) - have been less able to build up substantial savings in recent years, and they rely on loans to a greater extent. Finally, when analysing data by income strata a significant finding is that the wealthier subpopulation has access to a larger variety of financing options for their new property. In the most

extreme case (CZ), the top 30 % uses 2.0 different sources.

Send comments to The Editor

Related Articles

Drum rolls in the great disappearing act of Russia's banks

Jason Corcoran in Moscow - Russian banks are disappearing at the fastest rate ever as the country's deepening recession makes it easier for the central bank to expose money laundering, dodgy lending ... more

Kremlin: No evidence in Olympic doping allegations against Russia

bne IntelliNews - The Kremlin supported by national sports authorities has brushed aside "groundless" allegations of a mass doping scam involving Russian athletes after the World Anti-Doping Agency ... more

PROFILE: Day of reckoning comes for eccentric owner of Russian bank Uralsib

Jason Corcoran in Moscow - Revelations and mysticism may have been the stock-in-trade of Nikolai Tsvetkov’s management style, but ultimately they didn’t help him to hold on to his ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.