Citizens Can Finally Influence Apartment Prices

The Croatian real estate market, particularly the residential sector, is marked by stagnation in sales and a halt to years of price growth, leading to a kind of “war of nerves” between investors and buyers, as each side believes that they may fare better in the near future than they do now, it was highlighted at the round table “Real Estate Market in 2008 and Expectations for 2009.”

The round table was held as part of the two-day 5th Croatian Real Estate Fair and related industries, which began today at the Boćarski Dom in Zagreb, organized by the real estate classifieds "Real Estate Center." While buyers are counting on investors’ impatience and their desire to sell thousands of new apartments as soon as possible to meet their obligations to banks and obtain new working capital, investors are relying on the effects of still solid demand, it was assessed at the meeting. Currently, apartments are being purchased by those who cannot postpone their purchase, believes Boro Vujović from the real estate agency "Opereta," who emphasizes that October brought a culmination of the trend of reduced demand.

Dubravko Ćorić from the company "Protectus" assesses that investors cannot currently react to the psychological effects triggered by the global financial crisis and potentially significantly lower prices, as they agreed on the terms of their borrowing for working capital, intended for the construction of new facilities, during the positive conjuncture that prevailed a year or two ago. Professor at the Zagreb Faculty of Economics Josip Tica says that citizens, who must resolve their housing issues, have finally come into a position after years of waiting to influence prices with their calculations. However, he warns that every crisis – whether real or imaginary or caused purely by psychological effects, which he believes is the case in Croatia – has its bottom, and that anyone buying an apartment (or house) must know that after reaching the bottom, a rebound follows, which means less favorable conditions for purchase.

It is best, believes Prof. Tica, to buy a house or apartment at the bottom of the crisis, "but care must be taken not to fall through the bottom." Therefore, he says, one should not hesitate to buy if the family’s needs are real, as it is indeed unlikely to lose money on real estate. As much as the reduction in real estate prices and the decline in demand are good news for buyers, they are not for the construction industry, it was emphasized at the meeting. Participants also reminded that, according to official statistics, there has been a decrease in the number of building permits issued, so the current number of issued permits is at the level of 2001. The problem is that the number of employees in that economic sector has increased by 40,000 since its expansion, so if the unfavorable trend in issuing permits continues, it could lead to a reduction in the number of employees in construction. (Hina)