Many European Union countries experienced a decline in property prices in mid-2022, sparking discussions about a potential crisis. One of the primary reasons was the increase in reference interest rates caused by high inflation. By the end of 2022, property prices across the EU had decreased by 1.4%.
In contrast, Croatia saw an impressive rise in property prices. In Q2 2023, compared to Q2 2022:
Price declines were recorded in:
Germany: -9.9%
Denmark: -7.6%
Sweden: -6.8%
Luxembourg: -6.4%
Finland: -5.6%
Price increases were noted in:
Croatia: 13.7%
Bulgaria: 10.7%
Lithuania: 9.4%
Portugal: 8.7%
Slovenia: 7.4%
Poland: 7%
Since 2015, salaries in Croatia have grown by 49.7%, while property prices have surged by 79.6%, making them increasingly less affordable.
Interestingly, despite the price increase, there’s been a noticeable decline in demand in terms of transaction volume. According to data from the Ministry of Construction and the Economic Institute of Zagreb, a total of 116,734 property transactions were completed in 2022, a decline of 12.9% compared to 2021. However, the total value of sold properties rose by 6.3%, reaching 8.5 billion euros or 13% of Croatia’s GDP.
With Croatia’s anticipated entry into the Schengen Area and the Eurozone, there’s an expectation for the arrival of EU buyers with greater purchasing power, which will significantly influence price formation. Additionally, the popularity of vacation rentals is expected to drive higher demand for properties, both on the coast and in the continental part of Croatia.
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