If the entire country is experiencing a decline in real estate sales of 15 to 20 percent, in Istria, this decline is much greater, exceeding 60 percent in some categories. The real estate market in Istria has visibly cooled this year, and the once main driver of price growth, foreign buyers, has now become the primary reason for the slowdown.
This is evident from a real estate market analysis authored by Aljoša Vučetić, founder and owner of Maris Real Estate, who states that he has sifted through the entire database of e-Real Estate for southern Istria, examined all transactions, and concluded that the peak of sales in that part of our largest peninsula was recorded in the second half of 2024, when as many as 955 transactions were conducted, and since then, a sales decline of 40 to 65 percent has been noted across all segments: fewer apartments, houses, and land are being sold.
– Apartments remain the most sought after, but they are also experiencing the largest sales drop in 2025, with 65 percent fewer sold than the previous year. Houses recorded a decline of 66 percent, while land sales fell by 61 percent. The reasons for such a slowdown are numerous, with reduced interest from foreign, especially German buyers, weaker purchasing power of domestic buyers, and high, sometimes unrealistic prices being the most prominent – notes Vučetić.
No Interest in Villas
In response to Lider’s inquiry about how the decline in foreign buyers, especially from Germany, is felt on the ground, he states that the number of buyers from that country has dropped by about 50 percent, depending on the agency. There is a crisis in Germany, economic activity has fallen, and Germans, explains Vučetić, immediately tighten their belts and do not buy new properties. Given that Germans and, for example, Austrians were the largest buyers of large holiday homes and luxury villas, the largest sales drop is felt in that segment.
– The sales of overpriced holiday homes are declining – emphasizes Vučetić, adding that there are several problems with these villas. One problem is the excessively high prices, and another is that foreigners, in order to achieve the returns they hoped for and which some may have received about ten years ago, now have to run a serious business with these villas, put them on the market, take care of them, and all of this is a cost in itself. It is both a time and financial cost, and today, if a foreigner is buying a house in Istria, they do not want thousands of square meters, but a small indigenous house that is profitable, and such properties are almost nonexistent on the market. When one does appear, it is sold immediately.
– The average foreign buyer is no longer someone looking for a business opportunity, but rather a peaceful place to live – explains Vučetić, adding that it is becoming increasingly difficult to sell huge, generic, overpriced villas that could remain empty long-term, waiting for buyers who no longer return so easily.
Branko Papeš, founder and owner of Dogma Real Estate, states that not all properties in Istria have fallen at the same rates and that, for a proper interpretation of the situation on the ground, it is important to understand that local differences can be enormous even in Istria. According to him, in smaller communities on the peninsula, for example, the sales drop may seem drastic simply because no new building or tourist complex has appeared this year to generate traffic, as was the case last year. Therefore, caution is advised.
– On a small sample, every change looks like a big bug – emphasizes Papeš.
Problem of Unrealistic Prices
However, changes are occurring, primarily among properties with unrealistic prices. The sales drop is greatest for them, while where owners are realistic, there have been no problems with sales, he adds, neither five years ago nor today.
– Two phenomena have occurred in Istria. Until a few years ago, holiday villas were sold for prices ranging from 350 to 400 thousand euros, and now owners are selling them for 650 to 700 thousand, which is somewhat unrealistic. However, then there was a hyperproduction of holiday homes. Now you have several thousand holiday homes with pools for sale, almost all at unrealistically high prices, and it is normal that they are not selling. People have become greedy, wanting quick profits, but the market no longer demands that – explains Papeš, who still sees that foreigners have not completely lost interest in this market, they just do not want to pay those prices.
– Foreigners today come with a much smaller budget, looking for something indigenous priced between 150 to 200 thousand euros, and such properties are almost nonexistent. When they do appear, they are sold immediately – explains Papeš.
Safety is Attractive
Despite everything, he adds, Croatia remains an attractive destination, especially due to its proximity and safety. The primary reason why foreigners buy from us is that we are an autodestination, they can get here by car in a few hours. The second is physical safety, which, according to Papeš, we do not appreciate enough, but we should.
All of this is confirmed by Sergio Serdarušić, owner of the real estate agency Eurovilla. The trends we are witnessing today are not at all comparable to those from, for example, five years ago. Back then, during the pandemic, when travel was less and people worked from home, Istria was the center of market euphoria.
– Houses were sold via video calls, and prices rose month by month. At that time, some smaller villas were worth around 500 thousand euros, were booked for about 20 weeks, and generated a net annual income of six to eight percent, which is very good for real estate investment. Today, those same villas cost 700 or 800 thousand euros, occupancy has dropped to around 30 to 40 percent, and annual income has fallen to two to three percent. The yield has been halved, it is no longer six, but three percent. And this is immediately felt in the market – explains the Lider’s interlocutor.
Delayed Price Drop
The decline in foreign purchases automatically translates into a drop in transactions. Istria simply feels this in the market without them. However, we ask how it is that the market has not corrected itself, when he himself says that the real estate market in Germany and Austria has stalled.
– Here, prices change only after several years. People are not in a hurry, they do not need to sell urgently, so they wait. And that is why, just like after the 2008 crisis, the price correction happens only with a delay – emphasizes Serdarušić. Medium and smaller properties are still liquid, selling quickly, but the luxury real estate market practically does not exist.
The biggest problem is houses priced at two or three million euros for which there is a much smaller pool of buyers. Locals can rarely afford them, and foreigners expect better infrastructure, hospitals, international schools, restaurants of world-renowned chains, stores with well-known brands for that price, and unfortunately, we still do not have that, explains Serdarušić, adding that this problem is not exclusive to Istria but also affects the rest of the Adriatic.
