Bosnia's Real Estate Market Expected to See Price Increases

Experts predict that property prices in Bosnia and Herzegovina (BiH) will continue to rise in 2025. Demand in the country exceeds supply, and the era of cheap real estate seems to be over, according to Hercegovina.info report. However, some analysts highlight the country's tense economic situation and political instability, making the market less attractive for investment.



Compared to other European countries, Bosnian property prices remain significantly lower, according to Maho Taso, director of the real estate agency Prostor and vice president of the Real Estate Brokers Association at the Chamber of Commerce of the Federation of BiH. One of the most significant policy changes in 2025 will be the introduction of a VAT refund for first-time homebuyers who are citizens of Bosnia and Herzegovina.

New VAT Refund for First-Time Homebuyers

Taso explains that this measure will reduce apartment prices in new developments by 14.5%. For example, a property priced at 200,000 BAM (€102,041) with VAT will be €14,800 cheaper. This tax benefit applies to all adult citizens of BiH who have never previously purchased real estate.

The goal of this initiative is to make housing more affordable for local residents. However, luxury properties will not qualify for the VAT refund. The policy applies only to standard housing sizes:
- 40 square meters for the main buyer
- 15 square meters per additional household member

Smart Homes and Digitalization of the Market

The Bosnian real estate market is also expected to see an increase in "smart" properties featuring AI-powered systems for lighting, heating, and security.

"More investors are integrating modern technology into new projects, and real estate transactions are also becoming more digital," Taso noted. Virtual tours, drone photography, and 360-degree cameras are already widely used.

Investment Potential: Growth Amid Challenges

Minet Musić, CEO of MM Real Estate, believes the market is becoming more attractive to investors, with increasing interest in flexible housing models and projects with guaranteed returns.

According to Bosnia's Agency for Statistics, in Q3 2024, the average price per square meter of new apartments reached 2,906 BAM (€1,484)—a 12.1% increase compared to 2023. The number of newly sold apartments grew by 3.4%, but overall transaction volume declined by 3.6%.

Experts predict that prices will continue to rise due to higher construction costs, inflation, and interest rate fluctuations.

Low Rental Yields in Bosnia

According to Numbeo, Bosnia's average gross rental yield in March 2025 is estimated at 2.82–2.91%, a very low level for such markets.

- Sarajevo: 2.83–3.08%
- City center price per sq. meter: 5,633 BAM (€2,885)
- Outside center: 3,642 BAM (€1,863)

- Banja Luka: 2.87–3.08%
- City center price per sq. meter: 4,808 BAM (€2,459)
- Outside center: 3,350 BAM (€1,714)

Political Instability and Economic Challenges

Despite growing property prices, Bosnia's investment attractiveness remains questionable due to ongoing political and economic turmoil.

Political Crisis in Republika Srpska

In February 2025, Republika Srpska's leader Milorad Dodik was sentenced to one year in prison and removed from office for six years for defying orders from international peacekeepers, as reported by Reuters here.

Dodik rejected the verdict and warned that Bosnian Serbs would withdraw from state institutions in protest, stating:
"As of today, Bosnia and Herzegovina no longer exists."

Legal Disputes Threatening Bosnia’s Stability

In response, Republika Srpska passed a regional law prohibiting federal courts and police from operating within its territory, raising concerns about Bosnia's fragile political structure, according to APNews report.

Economic Unrest and Consumer Boycotts

In January and February 2025, Bosnia was also hit by consumer protests due to rising food prices. These boycotts, which began in Croatia, have now spread across the Balkans, as Euronews reports.

Conclusion: Should You Invest in Bosnia's Real Estate Market?
While Bosnia's real estate prices are rising, political uncertainty and economic challenges continue to cast doubts on its investment potential. Key pros and cons for investors include:

Pros:
Rising prices – potential for long-term growth.
New VAT refund – increasing affordability for local buyers.
Smart home technology – modernizing the market.

Cons:
Low rental yields – below European averages.
Political instability – ongoing ethnic tensions.
Economic uncertainty – inflation and consumer unrest.

Would you invest in Bosnia’s real estate market? Let us know in the comments!