Affordable Housing: How Are Cities Responding to Housing Challenges?

High real estate prices and rents are becoming an increasing problem in Croatia, especially for young families and educated individuals who are crucial for the development of local communities. Many are facing challenges in finding adequate housing, which is why cities and counties are turning to various models of affordable housing – from the construction of apartments for long-term rent, through subsidized loan programs, to innovative solutions such as building rights and the option to purchase after renting.

While optimal solutions are still being sought in some parts of the country, some cities are already implementing concrete projects that should ease the lives of young people and reduce emigration. The goal of such initiatives, of course, is not only to provide a short-term solution to housing issues but also to promote long-term demographic stability and economic sustainability.

Plans for the construction of 1,600 apartments in Split

The city of Split is actively developing an affordable housing program, planning to build around 1,600 rental apartments in the locations of Brodarica and Korešnica. About 500 apartments in Brodarica are intended for young families, while 1,100 apartments in Korešnica will also be available for veterans, university professors, and doctors. Additionally, the construction of 25 apartments in the Mejaši area is planned.

Mayor Ivica Puljak has previously stated that affordable housing is a priority for the city administration, which is confirmed by a special department within the city that deals exclusively with this topic. Split is also making amendments to urban planning regulations to ensure quality housing for citizens in the long term.

Rent with the option to buy in Slavonski Brod

The city of Slavonski Brod has been actively implementing measures to address the housing issues of young people for years, responding to high real estate prices and the trend of emigration. One of the first initiatives was the construction of apartments for young families, allowing them to rent with the option to purchase after ten years, with the paid rent being credited towards the purchase price. So far, 44 such apartments have been built, which are fully occupied and constitute a new residential community.

In addition to apartments, the city introduced a building rights model on city-owned land in 2017, aimed at married and unmarried couples, single parents, and single-parent families under the age of 46. The building right lasts for 99 years, with the option to purchase the land after ten years, with paid fees being credited towards the price. Users are required to build a house within 36 months. To date, over 90 contracts have been signed through more than 15 competitions, and 55 houses have been built.

Additionally, in 2024, a new measure was introduced – rental apartments with affordable rents, enabling young families to access favorable city rentals. Concurrently, the city offers support to entrepreneurs through the establishment of building rights on construction land, further promoting local development. These initiatives have contributed to the development of new residential communities and increased city revenues, while interest in the programs continues to grow.

Although the projects are financially demanding for the city budget, their long-term effect is reflected in the stabilization of demographic trends and the strengthening of the local community. Models like the one in Slavonski Brod have been recognized in other cities, such as Pula, but without the option to purchase. Each new phase brings improvements in construction quality and project sustainability, and Slavonski Brod continues to secure new land to expand the availability of these measures and respond to the growing needs of young families.

Incentive measures and urban planning in Osijek

Osijek is developing a comprehensive affordable housing program aimed at middle-income families and highly educated professionals. A program for affordable rental apartments for young families is in preparation, along with two additional measures – the subdivision of 25 plots in Tenja for the construction of family houses and the purchase of apartments from primary schools to be offered to young people.

APN will build 206 apartments in Osijek, while the city will participate in the POS program by covering the costs of communal infrastructure. Already in 2023, a building with 68 apartments was constructed in Tenja, intended for the city’s housing fund. Additionally, Osijek is developing urban planning to revitalize existing spaces and construct new neighborhoods.

Osijek is also recognized for its economic incentive policy, offering investors incentive programs, benefits, and an individual approach to investors.

Property tax has caused dissatisfaction

Despite positive initiatives, the new property tax law has caused dissatisfaction among counties that are not included in the revenue distribution. According to the new model, 20 percent of tax revenue goes to the state, while the remaining 80 percent stays with municipalities and cities, which counties consider unfair.

Primorje-Gorski Kotar County is already implementing a demographic measure of incentive housing, ensuring long-term rental apartments at prices below market rates. Since 2022, several apartments have been adapted in the cities of Cres, Vrbovsko, Čabar, and Rijeka, and the program continues this year.

Osijek-Baranja County, although also dissatisfied with tax changes, has been implementing a project to subsidize interest rates for housing loans since 2019, which has helped reduce emigration.

New National Housing Policy Plan

Let us recall that the Deputy Prime Minister and Minister of Spatial Planning, Construction, and State Property, Branko Bačić, recently appeared on RTL Danas, where he spoke about the Law on the Management and Maintenance of Buildings and measures for affordable housing.

He emphasized that municipal inspectors have already begun imposing fines for installing air conditioning units on building facades (€1,000 – €5,500) and that interventions such as closing balconies are regulated, which is only possible with the consent of 50 percent of co-owners and a unified project. For the first time, the law has regulated the role of representatives of co-owners, who can now receive compensation.

He also announced a new National Housing Policy Plan, which will enable sustainable housing and regulate short-term rentals, aiming to prevent new buildings from being intended solely for tourism. Additionally, those under 45 years old who purchase their first property will receive a 50 percent VAT refund and a refund of the property transfer tax, with payments starting in the second quarter.

You can hear about the latest initiatives for affordable housing and their implementation in the daily lives of citizens at the 11th Lider Conference on Smart Cities, which will be held on Tuesday, March 18, 2025, at the Westin Hotel in Zagreb.

The conference will feature numerous experts and mayors who will discuss key challenges and opportunities for creating affordable and sustainable housing. Join us while there is still space and find out how cities are adapting to the needs of their citizens regarding housing solutions, as well as many other current challenges.