Rising Real Estate Prices Turn Housing into a Political Crisis

European institutions have finally realized that they have a significant problem and that this problem is not only economic but also political. Affordable housing is one of the burning issues in the EU, discussed in every member state, including Croatia, and it seems that this problem is taking on a new face.

The new report from the EU Council on housing suggests that the explosion in real estate prices and rising rents are not just market issues but fuel that stokes populism. The report interprets that when housing policy is left to the logic of profit, and the market excludes millions of residents of Europe, including thousands of Croatian citizens, public discourse begins to echo the messages of bitter, excluded residents who cannot move out of their family homes and who do not have affordable real estate in their own city, which is why they are ready to punish anyone who embodies the system responsible for such a situation.

Although the report makes it clear that, if nothing else, we are not the worst, and that there are countries where real estate is much more expensive and less affordable, we do not have much to boast about either. The prices of apartments in Croatia have, according to this document, jumped by 114 percent in ten years, which is almost double the EU average. Young people leave their parents’ homes at 31.3 years, the latest in the Union. The official domestic housing policy consists of a combination of support for buyers who already own real estate, subsidizing banks, and a moral belief that investing in an apartment is a good investment opportunity; it always has been, and always will be. In short, market fundamentalism with local characteristics.

An apartment or house in Croatia, especially on the coast or in larger cities, is becoming a status symbol, a measure of success, security, and belonging. It is not surprising that in such circumstances we have fewer neighbors and more ads on Booking and Airbnb or, if you will, excellent investment opportunities and luxury projects where the lights will only be turned on in the summer months!

The state participates in this whole story by stimulating demand through subsidizing loans and thus, paradoxically, raising prices. It’s like trying to extinguish a fire with gasoline, but with a tax break and a raised moral finger. Such a policy not only fails to solve the problem but institutionalizes it by turning housing into a financial instrument and citizens into hostages of their own square meters. And all of this, now clear as day and black on white, has its price: such a policy not only creates social inequality but also political instability.

When half the population no longer sees a path to their own property, they begin to doubt the meaning of both Croatian and European values, not to mention market values. And when you have no value to hold onto, it is easy to follow those who seek scapegoats. For some, the culprits are in Brussels, for others in Belgrade, and for others, everyone who dared to ‘forget who fought for this country’ is to blame. But that is not the true source of anger. Populism does not arise in ideological laboratories, but in one-bedroom apartments where young people clash with their parents and in rented overpriced square meters with thin walls through which other lives come through, but not the feeling of one’s own. Now we finally have this in black and white.