Thursday, 11 November 2021

One in Four Pays Over Half of Monthly Income for Housing Loan

ZAGREB, 11 Nov, 2021 - The average monthly housing loan installment for people who took out the loan between November 2020 and June 2021 ranges from 41 to 44% of their monthly income, according to a Croatian National Bank survey, Večernji List daily said on Thursday.

Housing loans total HRK 67 billion, up by over 10% year on year.

The high demand for real estate is accompanied by a constant rise in prices, which are up by six to seven percent. At this rate, the price of a square metre of a flat could double in ten years' time.

"Croatia is a country with too many motives for the high demand for properties, from the tax treatment, tourism and low interest rates to the moving of the capital of the extra rich from banks, the APN (Croatian Real Estate Agency), the fact that some indeed need a place to live, that some buy properties in companies' names to pay less taxes, and the presence of foreigners," Maruška Vizek of the Zagreb Institute of Economics told the daily.

"The market can't offer enough properties for so many motives for there to be a drop in prices. The only solution is an adequate tax treatment, which won't happen," she added.

The central bank is worried about potential risks and that the crisis might spill over to the banking sector. Governor Boris Vujčić said recently the prices of housing properties were increasing more than incomes but not construction costs. All of that increases the risks of their corrections in future.

Most of the new housing loans (28% of the principal) are paid out with debt-to-income ratios of 30 to 40%. For another 26% of debtors, the ratio is 40 to 50%. For as much as 23% of the new housing loans, the monthly payment is more than half the debtor's income, Večernji List said.

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Sunday, 6 June 2021

Real Estate in Croatia - Sales Down, Prices on the Rise

June 5, 2021 – The Croatian real estate market is very interesting and full of good investment opportunities. Many potential buyers were expecting prices to go down significantly during 2021, but is this really happening? A look at real estate in Croatia. 

Croatian economy has been going through turmoil in the last year. While the pandemic is wreaking havoc on the travel and tourism industry, devastating earthquakes in Zagreb and Central Croatia caused even more problems and shifts in the local economy. Incredibly, the traditionally volatile real estate market in the country doesn’t seem to be going through a serious disruption, at least when it comes to prices.

Zagreb, the country’s largest city, is experiencing a turbulent period. The real estate market of the city has been rattled both literally and figuratively by a series of earthquakes. The damage from the earthquakes exposed a poor state of many buildings within the city’s centre. At the same time, much of the Croatian coast has had a rise in property prices due to the region becoming a global travel hotspot in the last 5-10 years. Many of the most attractive areas like Dubrovnik or Split centres seem overpriced to anyone looking to buy. With all this in mind, it would seem logical the crisis Croatia is facing at the moment would force the prices to drop. Still, according to an article by Dnevnik.hr, the prices generally seem to be stable or are even rising.

Regional Differences

The real estate situation in Zagreb is dynamic. The aftermath of the earthquakes left many searching exclusively for new buildings outside of the city centre. Consequently, there is a rise in prices for such properties. At the same time, there is a drop in prices for some centrally located apartments, but the buyers are rare, especially in buildings that are awaiting renovation. On the coast, Dubrovnik, the country’s most expensive real estate market, is seeing a drop in sales. Reduced demand doesn’t seem to be having a direct impact on the average price. It seems most property owners believe in a quick recuperation of this popular travel hotspot. This is also true for the rest of the popular Dalmatian areas. In Istria, the market seems stable and attracts plenty of foreign buyers, especially from Slovenia, Italy, and Austria. Around half of the properties sold in Istria are bought by foreigners.

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