In Montenegro, only 174 permits and notifications for residential construction were issued in the first six months of 2025 – the lowest figure in the past 20 years. Experts are confident: the reason is not falling demand, but changes in legislation that came into force in March this year.
Why are fewer permits being issued?
According to the Construction Committee at the Chamber of Commerce, the key reason for the decline in activity is the introduction of mandatory building permits instead of the previous simplified notification procedure for starting works, which had been in place since 2017.
Since March 2025, part of the authority to issue permits has been transferred to municipalities, but local administrations have been given a transition period to establish the relevant departments. It is this temporary “reformatting of the system” that led to the sharp drop in the number of documents issued.
Comparison with previous years
- In Q1 2025, 30 permits were approved (117 apartments).
- In Q2 – only 10 (57 apartments).
- For comparison: during the pandemic, 86 apartments were permitted in Q1 2021, and 324 in total over six months, which is twice as much as now.
- The record was set in 2017 – 1,649 apartments in the first half of the year, almost ten times more than in 2025.
What is happening with prices?
Despite the slowdown in construction, housing prices continue to rise.
- The average price per square meter of new-build housing in Q2 2025 was €2,201.
- A year ago – €1,821.
- In 2023 – around €1,500.
Thus, over two years, housing has become almost 50% more expensive.
The main growth factor is strong demand from foreigners, who in just the first half of 2025 invested in real estate almost €230 million. In addition, mortgage lending also increased – €126.5 million compared with €100.6 million a year earlier.
Forecasts and expectations
Market experts note that homes are currently being completed in Podgorica and other cities under permits issued in previous years, so the slowdown in construction will become more noticeable in 1–2 years.
The Construction Committee emphasizes that an objective assessment of the situation requires waiting for the results of the next quarters. Nevertheless, it is already clear that the volume of planned construction is shrinking: in 2023 – 148 thousand sq. m, in 2024 – 103 thousand sq. m. This is a sign of a slowdown in activity, but not of a complete withdrawal of investors.
Read also: Montenegro real estate market analysis: where is it more profitable to buy in 2025
Conclusion
Montenegro has faced a record drop in the number of new housing projects, but the real estate market remains “overheated” due to strong foreign interest. Legislative changes and the transfer of powers to the local level have temporarily slowed construction, but demand continues to push prices upward.
For buyers and investors, this means: the selection of new builds will be limited, and housing prices are unlikely to fall in the near future.