Sunday, 16 October 2022

Split Real Estate Prices Going Wild: Annual Increase of 20 Percent

October 16, 2022 - The prices of Split real estate have been rising for some time, and it is almost impossible to find an apartment where a square meter would go for less than 3,000 euros. For example, a square meter in the most expensive district of Split, Meje, costs almost 6,900 euros. The owner of the real estate agency Ivica Vulić was a guest in Novi Dan, where he shared his opinion on whether such prices can be maintained.

N1 reports. "Real estate prices rise according to the law of supply and demand," explains Ivica Vulić and adds: "Split is specific, there is not much room for expansion, the demand is high, and that is why the prices are rising. All projects are sold as soon as they obtain their building permit; they are even sold without a defined price because the owners do not know what will happen during construction in a year or two. Considering the high demand, the prices have been increasing by 20 percent annually for the last couple of years, maybe more. Split is also interesting to our customers, returnees, athletes, and entrepreneurs, that's why the prices are so high in select locations like Meje. Foreigners also invest. This situation with covid has encouraged people to invest money in real estate because the interest rates in banks are minimal, sometimes negative, so the best investment is in real estate."

Vulić believes that citizens tend to buy more because of the low-interest rates for savings in banks, so they think it is more worthwhile to invest in real estate.

When asked whether people should wait to buy real estate or not, Vulić answered: "If this situation continues, what you buy for five today, you will buy for six next year." Considering the prices of square meters of apartments, if you buy an apartment for 3,000 euros per square meter and calculate that you will pay it off through rent, it is logical that owners will keep raising the rent prices."

He says we cannot know when and how Split real estate prices will settle.

For more, make sure to check out our dedicated Lifestyle section.

Thursday, 25 August 2022

Talk of Classes Going Back Online - This Time not due to Covid

August 25, 2022 - President of the Croatian County Association (HZŽ), the prefect of Brod-Posavina spoke about the rise in energy prices and the possibility of re-introducing online classes - not because of the pandemic, but to save energy.

As SiB writes, the introduction of the euro, the decentralisation of state property, centers of excellence, and the multi-year program of cadastral surveying of construction areas, are all topics that were discussed on Wednesday at the Executive Committee of the Croatian County Association in Varaždin.

President of HZŽ, Brod-Posavina prefect Danijel Marušić said that the prefects discussed, among other things, current issues from the Ministry of Finance.

“First of all, there is a 20 percent limit to certain activities of the counties, that is, 20 percent of the original budget that can be used for salaries. Many counties, especially after the merger of state administration offices and counties, exceed that, so we think that had to change the laws”, said Marušić.

Marušić also spoke about the rise in energy prices and the possibility of re-introducing online classes - not because of the pandemic, but to save energy.

“The fact that we directed all our institutions to energy-renovate buildings, and we renovated 23 schools and all hospital buildings of our hospital system, turned out to be the right way and the savings were up to 75 percent”, Marušić pointed out, adding that the idea of ​​online teaching with the aim of saving energy is interesting and not impossible.

The host, Varaždin prefect Anđelko Stričak, said that all prefects are concerned about the announced increase in energy prices, especially when it comes to institutions.

“As far as the Varaždin County is concerned, at the beginning of the year, we secured enough energy for the whole year. Even then, these prices were rising and were 50 to 70 percent higher than the year before. We are secure until the end of the year," said Stričak.

For more, make sure to check out our dedicated News section.

Saturday, 7 May 2022

Eurozone Entry Will Mean Additional Improvement of Credit Rating, Says FinMin

ZAGREB, 7 May 2022 - Finance Minister Zdravko Marić said on Saturday he was pleased with Fitch's latest credit rating of Croatia, adding that accession to the eurozone will mean that the rating will additionally improve.

Fitch Ratings yesterday reaffirmed Croatia's investment rating at BBB with a positive outlook, estimating that the recovery of the country's tourism industry will support the economy at a time of slowing exports and that eurozone entry will mitigate financing risks.

Speaking to the press, Marić said citizens, enterprises and the government could be satisfied because the credit rating was maintained.

A very positive assessment, a very welcome report in these circumstances which gives us an incentive to continue all that we are doing, with a very likely positive unfolding of events in the remainder of the year as regards Croatia's credit rating, he said.

Fitch revised down its projection of Croatian growth for 2022 from 4.4% to 3.3%, citing base effects, a sharp slowdown in household consumption as high inflation affects consumer spending, as well as the effects of Russia's aggression on Ukraine.

Marić said that was understandable given that about ten days ago the government revised down its GDP growth forecast for this year to 3%.

In the fiscal part, Fitch's report is in line with the government's efforts, achievements and projections, the minister said, underlining that last year the deficit was reduced much more than expected and that this trend would continue this and in the years ahead.

As for potential risks for the rating's trend, Fitch mentioned an increase of the government debt and a significant delay in Croatia's eurozone accession.

"I'm deeply confident that none of that will happen. Actually, I'm sure of that," said Marić.

He recalled that since 2016, the public debt-to-GDP ratio has been decreasing every year except in 2020. "That's one of the basic characteristics and traits of this government's fiscal policy and it will continue."

Speaking of Croatia's eurozone journey, Marić said convergence reports by the European Central Bank and the European Commission were expected early next month. He also mentioned the Maastricht criteria - exchange rate, price and interest rate stability, budget deficit and government debt.

Marić said the deficit and the government debt were the fiscal indicators which opened the prospect of introducing the euro to the greatest extent. "If we hadn't consolidated public finance and done all that we have... we would have waited much longer."

Inflation in April expected to accelerate further

Speaking of inflation, Marić said the data for April would likely show an additional acceleration of the average price rise rate, but without a significant deviation from the average.

In March, inflation in Croatia went up 7.3% and the government has forecast its growth for this year at 7.8%.

Under the Maastricht criteria, Croatia's inflation over the past year should not exceed 1.5 percentage points in relation to the average inflation in three EU member states with the lowest inflation.

Marić said there were clear signals that the lower inflation rates in some member states, for example Greece, would be treated as deviation variables and that Croatia would meet this criterion, too.

He reiterated that Croatia planned to enter the eurozone on 1 January 2023 and that the final decision was expected by the first half of July this year.

At the moment, the introduction of the euro has a virtually negligible impact on inflation, he said, reiterating that in the last seven states which introduced the euro, the inflationary effect in the first year was between 0.2 and 0.4 pp on average.

Reforms as prerequisite for tax relief

Marić was also asked about a reform package proposed by the Croatian Employers Association  which is aimed at raising the net pay and includes raising the non-taxable income and reducing pension and healthcare contributions as well as income tax.

In order to further reduce the tax burden on labour, it is necessary to create the prerequisites by reforming the pension system and especially healthcare, he said, adding that the basic intention of the government's tak reform has been to reduce the tax burden on labour and profit.

For more, check out our politics section.

Tuesday, 3 May 2022

Večernji List: National Average Pay of €1,500 Possible Only With High Inflation

ZAGREB, 3 May 2022 - The average Croatian pay could reach €1,000 by the time of euro area entry, but inflation has been affecting purchasing power, the Večernji List daily of Tuesday says, noting that labour shortages will put pressure on wage growth in the private sector, while public sector unions have secured a base pay rise.

The average pay in the country has exceeded HRK 7,400 and the average net wage could amount to €1,000 by the time Croatia formally joins the euro area.

That is faster than expected by the Andrej Plenković government, but also faster is inflation, which has been affecting the purchasing power of all incomes in the country, putting it back to the level it was at in 2021.

On the occasion of International Workers' Day trade unions pointed out their new strategic goal - to secure by 2025 a 50% increase in the average and in the minimum wage, to amount to €1,500 and €750 respectively.

In the past period, wages have gone up by "only" 20%, so union wishes seem unattainable considering the productivity of the national economy and more than a turbulent situation in the country.

The 50% increase could possibly be achieved with a strong inflation spiral and indexation, but in that case the real value of wages would be lower.

European economies did not show good achievements in the first quarter of 2022, with Italy having seen a decline compared to the previous quarter, Germany reporting a mild increase, France stagnating, and Austria faring slightly better than in Q4 2021. Croatia's economic growth in Q1 should be above the average in relation to other European economies as both consumption and industrial activity were maintained.

Serious problems in supply chains from China will additionally slow down European production, already impacted by the dramatic rise in energy prices and the war in Ukraine.

The domestic market has been affected by a lasting labour shortage in the services sector, with the number of persons out of work having dropped to around 118,000.

The labour shortage will result in pressure on wage growth in the private sector while in the public sector unions have secured the first 4% base pay rise in 2022.

As for the regional distribution of wages, the average net wage in Zagreb (legal entities, without small trades and freelancers) amounts to close to HRK 8,700, so Zagreb is expected to reach the union target of a €1,500 average pay even before 2025, says the daily.

(€1 = HRK 7.5)

Friday, 22 April 2022

Final Day of Applications for APN Subsidies, not all to be Approved

April 22, 2022 - Another round of applications for the APN subsidies ends today. Croatia's State Real Estate Agency (APN) say that they have never received more applications, almost five thousand, but it remains uncertain if all of them will receive the subsidies. Demand is growing, and the rise in housing prices which is directly linked with the provision of subsidies does not help either.

As SiB writes, there aren't that many apartments, while potential buyers are numerous. For a few years now, the demand for apartments has been just as wild as the rising prices of these precious square metres. 

"For what was the price of a two-bedroom apartment a year ago, now you can only buy a one-bedroom apartment. In Zagreb, the average price per square meter is 2,300 euros, in Rijeka 1,900, in Split 3,000, and in Osijek 1,050 euros," shared Luka Prica, the owner of a real estate agency, with RTL.

Less than 24 hours remain until APN applications are closed. A record 4,870 requests were received, and funds are limited, with HRK 50 million provided.

First come, first serve
"All the applications that were submitted in time, up to the request number 4,100 if all documents are complete, will be processed and approved accordingly", said Goran Golenić, assistant director of APN.

In previous years, it never happened that someone did not receive the subsidies, but APN warns - we can not guarantee that it will be the same this time around. Those who have submitted their applications first are at an advantage. So far, 2,462 applications have been approved in this round.

"When the funds are spent, we will inform the competent authorities and make decisions on further actions accordingly," Golenić claims.

Better days with cheaper square metres, it seems, are not in sight.

"We are entering the Eurozone, inflation has been announced, we are witnessing an increase in the prices of materials and labor - we cannot expect a drastic drop in prices," Prica claims.

Surely, the new round of APN subsidies announced for next year will come in handy for many.

For more, check out our lifestyle section.

Thursday, 21 April 2022

Pensioners' Associations Demand 10% Pension Rise

ZAGREB, 21 April 2022 - Two pensioners' associations on Thursday asked the government to raise pensions by 10% and change the pension indexation model, due to the rise of inflation and food prices, for seniors shortchanged in the pension reform.

In an open letter to Prime Minister Andrej Plenković, they say that in February the average pension was 35.5% of the average pay, which puts Croatia at the bottom of the EU. Last year two in three pensions were below the poverty live at just over HRK 2,900.

Since the rise of inflation and food prices poses an additional blow to pensioners' low living standards, the associations expect the prime minister to take action to protect the oldest citizens.

The associations demand that by the end of June, pensions be raised by 10% for all those who retired after 1 January 1999, saying that this would total HRK 308 million a month for 1.14 million pensioners.

The associations don't want the 10% increase to be in force only until prices on the world market are put under control, but a lasting intervention for seniors whose pensions have been cut by 10% by the then pension reform.

They also demand that pensions up to HRK 2,000 be indexed by 120% and those from HRK 2,000 to 4,000 by 110%.

The government has announced that as of next month it will pay an energy allowance for seniors whose pensions are below HRK 4,000.

The associations welcome that, but propose that seniors whose pensions are below HRK 1,500 be entitled to a HRK 400 monthly energy voucher, to which only those receiving national and guaranteed minimum allowances are entitled.

For more, check out our politics section.

Tuesday, 19 April 2022

Further Decrease in Vulnerability of Financial Services Sector Hampered by Inflation

ZAGREB, 19 April 2022 - The Croatian financial services sector's exposure to systemic risks slightly decreased at the end of 2021, primarily due to the strong economic recovery, but a further decrease in the sector's vulnerability is being hampered by accelerated inflation and the escalation of geopolitical risks, HANFA said on Tuesday.

A more significant recovery and decrease in vulnerability of the sector is being hampered by accelerated price increases, which is reducing household purchasing power and slowing down consumption. Another source of uncertainty is the still present COVID-19 measures and the escalation of geopolitical risks relating to the war in Ukraine and sanctions imposed on Russia, the Croatian Financial Services Supervisory Agency (HANFA) said in its Macroprudential Risk Scanner.

This publication provides insight into the process of identifying, assessing and monitoring the evolution of systemic risks in the financial services sector so that appropriate measures can be promptly taken to prevent their materialisation and the impairment of financial system stability.

Friday, 15 April 2022

4,270 Croatian Businesses Have so Far Received €17m in Natural Gas Subsidies

ZAGREB, 15 April (2022) - So far, 4270 Croatian businesses have received a total of HRK 128 million (€17m) in subsidies to cushion the impact of increased natural gas prices on their operations, Minister of Economy and Sustainable Development Tomislav Ćorić said on Friday.

"In the first two weeks of the implementation of the government measure to mitigate the consequences of increased energy prices, 4,270 businesses applied for a natural gas subsidy allocated by the Ministry and HRK 128 million has been granted. We invite other SMEs (small and medium-sized enterprises) to apply," Ćorić wrote on Twitter.

On 1 April, the Ministry, in cooperation with the HAMAG-BICRO agency for SMEs, launched an aid scheme for micro, small and medium-sized enterprises with an annual natural gas consumption of up to 10 GWh, providing a subsidy of HRK 0.15 per kWh. This is de minimis aid aimed at reducing natural gas bills. Under the scheme, every month businesses pay the amount stated on their bills, while the Ministry pays the subsidised amount directly to the natural gas provider. The monthly subsidised amount is automatically deducted from the businesses' vouchers.

The total projected amount of this measure is HRK 600 million (€80m).

Business: For more, check out our business section.

Wednesday, 16 March 2022

February Inflation Of 6.3% Highest Since August 2008

ZAGREB, 16 March 2022 - In February 2022, compared to February 2021, the prices of goods and services for personal consumption increased by 6.3%, the most since August 2008, when annual inflation was 7.1%, the Croatian Bureau of Statistics said on Wednesday.

In February 2022 inflation continued to increase. In January 2022 it went up by 5.7% on the annual level, in December 2021 by 5.5%, in November by 4.8%, in October by 3.8%, and in September by 3.3%. The first major inflation increase last year was recorded in April (+2.1%).

In February 2022, compared to January 2022, the prices of goods and services for personal consumption, measured by the consumer price index, increased by 0.9% on average, while on the annual average they increased by 3.6%.

At the annual level, the highest increase on average in consumer prices was recorded in Transport, of 10.7%, Food and non-alcoholic beverages, of 10%, Furnishings, household equipment and routine household maintenance, of 6.5%, Alcoholic beverages and tobacco, of 6.4%, Restaurants and hotels, of 6.2%, Recreation and culture, of 4%, Clothing and footwear, of 3.5%, Miscellaneous goods and services, of 3.4%, and Housing, water, electricity, gas and other fuels, of 3.3%.

The largest contribution to the growth rate of the annual index came from Food and non-alcoholic beverages (+2.59 percentage points), Transport (+1.57 percentage points), Housing, water, electricity, gas and other fuels (+0.56 percentage points).

At the monthly level, the highest increase on average in consumer prices was recorded in Clothing and footwear, of 3%, Furnishings, household equipment and routine household maintenance, of 1.9%, Transport, of 1.6%, Recreation and culture, of 1.5%, Restaurants and hotels, of 1.3%, Housing, water, electricity, gas and other fuels, of 0.5%, and Food and non-alcoholic beverages, of 0.4%.


Business: For more, check out our business section.

Saturday, 12 March 2022

SDP Main Committee Says Government Should Resign

ZAGREB, 12 March 2022 - The Social Democratic Party's Main Committee on Saturday supported the SDP parliamentary group in a motion to dissolve parliament, and concluded that the government cannot become better by changing a minister or two, that it is spent, does not govern well, and should step down.

Crises can no longer be an alibi for politically unsuccessful action, Main Committee chair Marija Lugarić told the press.

The committee concluded that the government's anti-inflation measures are not enough as they do not take into account the aggression on Ukraine and the war's impact on inflation. 

SDP president Peđa Grbin said the party was proposing to index pensions either with salary or inflation growth and to abolish VAT on fuel excises.

He said it was time to start talking about a new economic model which would not rest solely on tourism.

Commenting on a drone which crashed in Zagreb on Thursday night, Grbin said something was not working security-wise nor in communication with the neighbours. Hungary should have notified us that the drone had crossed their territory, he added.

Grbin said he expected the prime minister to say clearly what went wrong and how he would prevent such things from happening again. If it happens again, the reaction should be much faster and more organised, and citizens should be informed better so that there is no panic, he added.

Grbin said he expected NATO to investigate the matter and say clearly why the information system failed.

"If the drone ended up in Croatia by accident, that's not good because the warning system failed, and if it was by accident, that's very, very bad because it means that not only Croatia but NATO, too, have somehow been dragged into the conflict," he added. 

Page 1 of 2