APARTMENTS IN WHICH THE MARKET LIVES

Text originally written for the weekly Time

It says: Marko Aksentijevic

If ants started building anthills in vain, which they would not use for living or food storage, but would only protect them from being moved in by ants who do not have their own anthill - we would consider that behavior, to say the least, unusual. First we would suspect some fumes or other toxins that clouded the ant's mind, then we would look for the cause in mutations, collapse of social structure and changes in available resources. It would never occur to us that empty anthills have value to ants simply because some other ants have no home. 

With similar amazement, some distant extraterrestrial civilization observes modern cities on our planet. And there is a lot to see - apartments are intensively built, which often remain empty, while in their surroundings people live in overcrowded or substandard homes, and sometimes even without a roof over their heads. But that's because aliens, like ants, don't understand economics. Unlike them, humanity is skilled at increasing economic value and along the way will create millions of homeless people if necessary.

Not so long ago, apartments were built primarily for people to live in them. The victory of capitalism in the Cold War led to the intensive penetration of capital into all pores of society, and therefore also into housing. The apartment has become another type of commodity, investment, subject of speculation and part of financial instruments. The fact that it is still a daily necessity of every household only gives it additional value in the market, but the apartment does not have to be lived in at all in order to perform its primary function of increasing economic value. This is why we are witnessing the construction of apartments where no one moves in on all meridians: in London, Beijing, Lima, Lagos, Vancouver, and even here. We no longer build apartments for people, now we are equal participants in global trends. The transition brought us to the final starting point - we build apartments for the market to live in. 

Between the two censuses, the number of apartments in Belgrade alone increased by 134 thousand, while the number of unoccupied apartments increased by 24 thousand. Thus, according to official statistics, there are 10 abandoned apartments in Belgrade, 35 of those that are used occasionally and another 108 temporarily uninhabited apartments, which is an awkward amalgam because it includes apartments that are new and not yet occupied or were vacated due to moving at the time of the census. and works, but also those apartments where someone living outside of Belgrade lives. If the official statistics are not convincing enough, perhaps a look at the extinguished lights in the newly constructed buildings will help us to ask for whom it is being built. 

According to EUROSTAT data, the overcrowding of apartments in Serbia in 2022 amounted to 50 percent, while at the level of the European Union, with which we like to compare, it was at 17 percent. Likewise, the average age when young people move out of the family home is 5 years higher in Serbia (31.4) than in the EU (26.5). If you add to that the poor condition of most of the existing housing stock, it is clear that the need for better living space exists. On the other hand, the average household that lives in an average overcrowded apartment and has an average income cannot afford a square meter of 4 euros. New apartments are mostly bought by those who earn significantly above average and often invest in their third or fourth property. Pair to pair and apartment to apartment. 

It is clear that our average household has no chance in that unequal competition where some have to make the biggest investment in their life and others have to park or launder the excess money. One part of the problem is certainly the fact that those with excess money in Serbia do not have a choice of capital market, so they naturally invest in real estate whose prices are constantly rising, so the money invested in them multiplies even in addition to the costs of maintaining the apartments. In addition to the rich in Serbia, apartments are also bought by the diaspora who think they will return someday, as well as foreigners who acquire the right of permanent residence through this acquisition. As far as the official policy is concerned, this is exactly how it should be because the construction industry makes the most significant contribution to the growth of Serbia's GDP.

Gross social product, if anyone hasn't realized it by now, is the measure of all things. As long as the construction of apartments contributes to its growth, as far as the state is concerned, they can be inhabited by ales and bogus, or nobody, it doesn't matter. If it were otherwise, there would probably be some background check on the money being invested in real estate. Instead, a record number of building permits are being issued, Belgrade on the water is expanding, Expo is being built, we will concrete every inch of free space, even when the number of apartments exceeds the number of inhabitants. That moment may come quickly anyway, given demographic trends and projections. 

The concept of the General Urban Plan of Belgrade 2041, which we saw 3 years ago and which in its nature as a working document is still the most we have of the long-term development plan of the city, justifies additional urbanization with the expectation that Belgrade will increase by 100 thousand inhabitants. That expectation is in direct opposition to the demographic studies that are an integral part of the document itself. The worse for studies! We no longer plan according to the needs of the people, but according to the GDP. It is easier to meet the housing needs of 100 thousand non-existent people than to deal with the housing and other problems of the existing ones. That intensive construction only magnifies real problems is only a small inconvenience of large-scale construction. As long as the concreting of every square millimeter is not reflected in the prices of those new buildings at one point. 

Expensive square meters, especially in Belgrade, like to be as central as possible. If it were not so, empty apartments could be built somewhere cheaper and nicer. However, even though no one will live in them, they must be desirable for living. And so much construction only contributes to the heat, floods and unbearable life in the city, which, in the market's vocabulary, has a bad effect on real estate prices. Thus, in every new building in the already densely built parts of the city, a part of its future decline in value is incorporated. Oh time, oh more! 

However, we should be more concerned about the consequences for the entire society of completely leaving housing to the invisible hand of the market. In addition to not solving the real housing needs of its citizens, this kind of state policy (ie its absence) has a negative impact on various social problems. First of all, on the already mentioned demographics. The impossibility to solve the housing issue in a safe way affects the delay in starting a family or in general the desire of young people to stay in the country. Those who remain have reduced social mobility because they cannot easily afford housing costs in their desired place of education or work. There is not enough space in empty apartments because capital needs comfort.

It is easier to imagine Serbia dying out than taxing empty squares. Otherwise, we would probably be having an exciting public debate about how to activate existing unused space for real housing needs. Here is a problem that could be solved to a large extent with the existing resources because there are apartments. But things are not that simple. Things are complicated and that's why the apartments are empty. Only aliens can't understand that.