The housing market in Croatia: what causes the increase in property price
The housing market in Croatia continues to show steady growth, in contrast to the dynamics of many European countries. There is fairly high activity on the part of buyers, which experts explain to the low-interest rates. The Croatian government has not followed the example of the EU and the U.S. and did not raise rates so that the purchase of real estate remains affordable to a large number of citizens. In addition, a positive factor for the development of the real estate market can be considered a strong economy, which has recovered from the pandemic and shows growth.
According to official data by 4Q 2022, the cost of housing in the country increased by 13.6% year-on-year. However, considering this figure in light of the inflation rate, the price increase was at 1.4%. On a quarterly basis, home and condo rates increased by 3.7%; adjusted for inflation, they sagged by 1.5%.
Zagreb is the leader in the growth of housing prices in the primary market. Here the cost has increased by almost 15%. In second place are the coastal regions of the Adriatic Sea, where the rise in new buildings was observed at almost 13%. In the rest of the country’s regions, the new housing increased in price by about 15%.
At the same time in Croatia, there is a limited supply in the real estate market and demand has long remained high. The sustainability of the sector is supported by the country’s strong economy. In 2021 it showed a good recovery after a decline during the pandemic. Growth rates have reached more than 10%, making it possible to compensate for the fall of 8% that was recorded in 2020. Croatia’s GDP grew by almost 8% 4Q 2022. This result was achieved primarily thanks to a strong increase in exports. In addition, the government supported households and many of them switched to sustainable consumption.
The real estate market in Split showed good development in 2022. In this city, the price of apartments rose sharply, starting at 3 thousand euros per square meter. In the prestigious area of the city, the price per square meter reaches 6,900 euros.
According to experts, the reason for the increased cost of real estate in Split is the increased demand, as well as the peculiarities of the city. The fact that the terrain does not allow for a significant increase in construction, there are very few plots for the erection of objects. However, the demand for real estate is high, and as a result, prices continue to rise. For several years in a row, the cost of apartments and houses in the city is increasing by an average of 20% per year. Not only local buyers but also foreigners show interest in local properties.