Real Estate Transactions Slow Down, There Are 200 Thousand Empty Apartments in Croatia

Real estate transactions are slowing down, owners of used properties have unrealistically high expectations, and the state housing policy, despite the existence of 200 thousand empty apartments in the country, has not yet been completed due to missing data from the population census, it was stated on Thursday at the HGK’s Real Estate Business Forum.

The president of the Real Estate Business Association Dubravko Ranilović says that real estate transactions are slowing down and that there is a change in trends. ‘Slowing down means a decrease in the number of transactions. For comparison, in the first half of this year compared to the first half of last year, the decline in transactions amounts to nine percent,’ noted Ranilović, adding that the decline is not uniform across all counties.

He also emphasized that real estate prices continue to rise, but at a lower rate than before. He stated that the price growth of real estate is slowing compared to last year when that growth was double-digit.

He pointed out that the prices listed in advertisements and the asking prices are not the same as the realized prices, which are significantly lower. According to him, one should look at realized, not asking prices, and the difference between asking and realized prices averages around 15 percent.

Ranilović believes that the increase in interest rates in EU countries has also affected our market. He claims that the local market is polarized, but there is still significant interest from buyers in new construction. He also mentioned that interest from foreigners in purchasing real estate in Croatia has decreased.

Zaher: Other Channels for Investing Excess Money Are Opening

The advisor to the president of HGK for trade Josip Zaher stated that a lot has been built in our country over the past two to three years – both infrastructure and residential properties.

This past period, he explained, was maintained by low interest rates and the flight of investments into the residential sector, i.e., residential properties. Namely, at the end of last year, under pressure from the conversion of the kuna to the euro, there was an excess of kuna, which many tried to invest in real estate.

– Today, the situation is completely reversed, banks have started to raise interest rates under pressure from central banks, both Croatian and EU, and interest is declining since real estate is no longer as suitable as investment capital – emphasized Zaher. He added that capital costs are rising and that Croatia has opened some other channels where excess money can be invested, such as bonds.

– Due to the shortage of good new properties in the city of Zagreb and along the Adriatic, real estate still holds its price. However, there is a slowdown in both volume and prices. We believe that in the future, construction in cities will be potent and will satisfy the market – concluded Zaher.

Uhlir: There Are 200,000 Empty Apartments in Croatia

Speaking about the housing policy of the Republic of Croatia, the state secretary in the Ministry of Physical Planning, Construction and State Property Željko Uhlir emphasized that the state housing policy should have been made much earlier, but that now is the ripe time to make a decision and start this work.

– We have been working on this project for months, we have gathered a lot of data, many ideas. Housing policy is a unique strategic act and it has several measures that shape the housing policy of each state. There are four basic measures: one is tax policy, the second is financial, the third is land, and the fourth is ecological-energy – emphasized the state secretary.

He also noted that it is still unknown which measures will be dominant or represented. ‘For example, taxes can be repressive or incentive, we need to program all of that and propose it to the Government, and it is up to them to decide,’ said Uhlir.

In Croatia, there are about 200 thousand empty apartments, he pointed out, adding that this is a fact we cannot hide.

– Something must be done about this – believes Uhlir. He explained that putting these properties into function can be done either in an incentive way, as the Austrians do, by offering favorable loans to those who want to renovate their residential property and place it on the market and exempt them from some taxes, or in a repressive way through property taxes.

He also stated that the state housing policy cannot be completed because his ministry and all institutions that need it still do not have all the results of the processing of the 2021 population census.

The president of the Professional Group of Real Estate Agents of the Zagreb Chamber at HGK Lana Mihaljinac Knežević believes that inflation has impoverished citizens, but also that owners of used properties have raised their expectations significantly in the last couple of years. Regarding foreigners who buy real estate in Croatia, she said that most are Germans. She does not expect a significant drop in real estate prices, and she expects owners of used residential properties to revise their expectations.