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The fact is that real estate prices in Montenegro are high, raising the question of whether these prices are sustainable or if the market is gradually entering a risk zone. Psychological beliefs that real estate is a safe investment—that it never loses value and that prices that have once risen will not fall again—create a false sense of security in the market. This often leads to mass euphoria, encouraging over-investment in property without a realistic or genuine need. Below, you can read about the key indicators showing that the real estate market may be approaching a risk zone.

The biggest risks for the real estate market in Montenegro

1. Accelerated price growth. The prices per square meter are steadily increasing and are no longer aligned with the average income levels in Montenegro. As a result, property prices significantly exceed the purchasing power of the local population, which from an economic perspective threatens the long-term sustainability and stability of the market.
2. Imbalance between market activity and real economic needs. Many people buy real estate not out of genuine necessity, but as an investment—to rent out or to protect their money from inflation. As a result, many properties remain empty or are only occasionally used. This is supported by the 2023 census conducted by Monstat, which states: "There are 392,909 apartments listed, with a total area of 28,611,526 square meters. Of these, 285,734 are used for permanent residence, covering 21,920,079 square meters. A total of 16,720 apartments, with an area of 732,936 square meters, are used solely for business activities. Seasonal use accounts for 89,083 apartments, totaling 5,863,115 square meters, while 1,372 apartments, covering 95,396 square meters, have no data regarding their type of use." According to the census, about six million square meters of residential space remain empty or underused. For more details, you can check the official Monstat report here: https://www.monstat.org/uploads/files/popis%202021/saopstenja/SAOPSTENJE_STANOVI%202023_II.pdf.  
3. Credit over-indebtedness. Driven by the current rise in prices and the expectation that they will continue to increase, more and more citizens are choosing to take out loans. However, credit over-indebtedness poses a serious risk, especially when interest rates return to more realistic levels. Higher loan installments could lead to a decrease in demand for real estate, as citizens’ ability to afford payments diminishes.

It is impossible to accurately predict whether the market will naturally stabilize or experience a complete "burst" due to the factors mentioned or other external influences. Only time will reveal the direction in which the market will move.
To learn more about the risks and opportunities in the Montenegrin real estate market, feel free to contact us!