Young people are leaving B&H, it’s a fact. There are several economy related reasons. But there are also reasons not directly related to economy. One of them, in my city (Banja Luka), is price of real estates.
For example, in Paris you would need 1,3 average salaries to buy 1 square meter of a real estate, and in Vienna 1,5. In Banja Luka, you would need 2,86 average salaries. I’m not sure why is that so. Answer might be somewhere between investor urbanism and trend of Banja Luka’s diaspora buying large percent of those flats. For diaspora, 1150€ for 1 square meter is affordable (in Paris it’s 6500€ and in Vienna 3000€), but for domestic residents it is not.
I recently got a chance to read Eda’s publication First flat (2010), and in there I have found a scenario calculation for young couple planning to raise a credit for buying flat.
- flat size: 50 square meters
- price of square meter (cheaper one): 1050€
- 2 average net salaries: 780€
- maximal yearly annuity: 390€
- interest rate: 7%
- repayment period: 261 months
- interest: 50 000€
- principal and interest: 102 000€
This is not a realistic scenario IMO. It is more likely that young people will continue living with their parents and minimize their costs, delay forming a family, or rent cheap flat and wait for the opportunity to leave the country. Other alternatives I see are involving in criminal activities or leaving the country immediately. In any case, in all of these scenarios their bonds with this city and country are purely emotional, and therefor relatively weak. That means even less workforce in B&H in the future, and what is even more worrying for the society in general is lower birthrate.
I see this as some kind of a failure (market failure?) which needs intervention in order to make buying a flat feasible for young couples (using credit funds seems inevitably). It is not only society in general, represented by the government and local governments, that I believe should be very interested in solving this issue, but also enterprises. If these trends continue in the future, and if nothing changes they will, there almost won’t be any workers left.
There were some attempts to lower price of real estate for specific groups in some municipalities and I will analyze them in the next blog. I will also try to position where could enterprises be in that scheme, in a way that could be acceptable for them.
P.S. While writing this, I started thinking if bonding young people to this country is evil and if I should simply delete this post. I decided not to delete it, but it probably is evil, sorry.