Croatia’s property prices soar compared to last year

Real estate prices in Croatia climbed by about 14% in this year’s first quarter compared to the same period last year and by about 73.6% compared to the same period in 2015, according to state statistics published on Wednesday that go against promises of a sharp drop in prices.

Real estate prices in Croatia continued to grow this year, significantly increasing after Croatia entered the visa-free Schengen zone and the Euro area.

While commercial real estate prices continued to increase exponentially, the rise in residential property prices increased significantly less at 2%, according to data from the Central Bureau of Statistics (DZS) published on Wednesday.

However, despite price differences still existing between Zagreb, the Adriatic and other parts of the country, the price increase for residential property has been building up over time, with DZS data pointing to a 73.6% increase between the first quarter of 2015 and the same period this year.

This unfortunate trend, also visible in other parts of Europe, likely prompted the European Central Bank (ECB) to promise a sharp drop in residential property prices for Croatia and other members of the Eurozone – a club Croatia joined at the start of the year.

While available data would indicate that this ship has sailed, real estate experts have warned that the real estate price growth period has ended in Croatia.

“The expansion of real estate prices has obviously come to an end. A correction of real estate prices can be expected at the end of this year or the beginning of next year, especially for used real estate. However, the collapse of prices and the market will not happen,” the Real Estate Business Association vice president told EURACTIV.

Despite this, available data also shows that Croatia’s real estate growth has slowed, while in Zagreb, it has practically stopped, Vujović warned.

“On the market, we already have a big gap between the expectations of buyers and the expectations of real estate sellers. The prices sellers ask are high, and buyers, in principle, are no longer willing to pay them. Many of them are also waiting for further developments in the situation on the real estate market, especially after the ECB’s warning”, said Vujović.

He also points out that there is a growing difference between the sale prices requested by sellers and those eventually paid by buyers, noting that the difference ranges from 5-20% depending on the area where the properties are sold.

However, the sale price per residential square metre remains high, particularly in Zagreb – with prices ranging from around €3,000 for new buildings to about €2,600 for used apartments.

On the Adriatic, on the other hand, prices vary from one part of the coast to another.

In the area of Dubrovnik, for example, the asking prices for housing are now around €3,700 per square metre while prices in Istria are more around €3,000, Vujović added.

(Adriano Milovan, EURACTIV.hr)