Price pressures on Croatia’s property market may ease

Significance

This was higher than the annual rates recorded during the pre-2008 boom, and comfortably above 2022 inflation. Property prices are rising because of a combination of low interest rates, government subsidies, foreign demand and strong tourism. The market is overvlaued on core measures and experts fear a property bubble could threaten financial stability.

Impacts

• A slowdown in the EU could affect the Croatian property market, since more than one-third of buyers are foreigners.
• The end in 2023 of the moratorium on EU citizens buying agricultural land could see a surge in sales in the market’s most-traded sector.
• Commercial banks could tempt customers with lower rates and special offers to offset expected weaker demand for non-subsidised mortgages.
• Higher house prices will in effect transfer wealth from the younger generation of renters to the older generation of house owners.
• Rising house prices and rents could affect income inequality, especially in the tourist areas of Dalmatia and Zagreb.