DETERMINANTS OF PRICE DIFFERENCES AND GROWTH DYNAMICS BETWEEN THE PRIMARY AND SECONDARY RESIDENTIAL REAL ESTATE MARKETS IN THE REPUBLIC OF SERBIA
DETERMINANTS OF PRICE DIFFERENCES AND GROWTH DYNAMICS BETWEEN THE PRIMARY AND SECONDARY RESIDENTIAL REAL ESTATE MARKETS IN THE REPUBLIC OF SERBIA

Summary/Abstract: This paper examines the determinants of residential real estate prices in the Republic of Serbia, with a particular focus on differences between the primary (newly built) and secondary (resale) housing markets. The main objective is to analyse how macroeconomic and market factors—such as inflation, the key policy interest rate, construction activity, housing loan dynamics, and household income—affect both housing price levels and their growth dynamics across major Serbian cities. The empirical analysis is based on a harmonized panel dataset covering six cities (Belgrade, Novi Sad, Niš, Kragujevac, Subotica, and Čačak) over the period 2017–2024. The study applies a three-step methodological approach consisting of exploratory trend analysis, correlation analysis, and panel data regression models. This framework allows for the identification of structural price patterns, the assessment of interrelationships among variables, and the estimation of the relative importance of macroeconomic and local drivers of housing market dynamics. In addition to analysing price levels, the study introduces a comparative dimension by separately modelling new-build and secondary housing markets, as well as the difference in their growth rates. This enables a more detailed understanding of how different segments of the housing market respond to macroeconomic shocks and local demand conditions. The results indicate that construction activity and household income are the most consistent determinants of housing price levels, while macroeconomic variables such as inflation and interest rates play a more pronounced role in explaining relative differences in price growth between market segments. The findings also suggest heterogeneous responses between new and existing housing, highlighting structural segmentation within the Serbian real estate market. The study contributes to the literature on housing economics by providing one of the first city-level panel analyses of Serbia that explicitly distinguishes between primary and secondary housing markets. The results may be useful for investors, developers, banks, and policymakers by improving understanding of housing price formation and supporting more informed investment and policy decisions.

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