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San Patrik real estate Pulse of the Real Estate Market in Croatia: Overview of key trends 2023/24

Pulse of the Real Estate Market in Croatia: Overview of key trends 2023/24

December 7, 2023

In the context of current global economic, social, and political challenges, an analysis of the real estate market in Croatia for the first six months of 2022 compared to the same period in 2023 reveals significant changes. This analysis examines statistical data to provide insights into current trends and possible future movements.

1. Decrease in Transaction Numbers

Analyzing the real estate market in the first six months of 2022 compared to the same period in 2023, we notice a significant drop in the number of transactions by 9.1%, from 15,216 transactions to 13,825. This trend reflects increased caution among investors and buyers, who have become acutely aware of the unpredictability characterizing the current economic environment of the Eurozone, marked by high but now declining inflation, and an increase in interest rates by the European Central Bank. Additional insight is gained by looking at Germany, the country with the largest number of foreign buyers in Croatia, which recorded a decrease in the number of transactions, as well as a significant 10% drop in real estate prices. This data further emphasizes the caution prevailing in the market.

2. Regional Market Dynamics

Interestingly, trends vary by region. While the City of Zagreb, comparing the first two quarters of 2022 and 2023, recorded a transaction decrease of 22% (from 5,731 to 4,457), Primorje-Gorski Kotar County also saw a decrease of 19% (from 2,240 to 1,813 transactions). Split-Dalmatia County records a decrease of 9% (from 1,482 to 1,352), and Zadar County a substantial 25% (from 994 to 745 transactions).

On the other hand, Istria County shows a growth of 3.5% (from 1,661 to 1,720 transactions), Osijek-Baranja County records a slight increase of 1% (from 692 to 699), while Šibenik-Knin County stands out with a growth of 29% (from 239 to 308 transactions). These figures clearly show that, despite the overall market downturn, certain locations in Croatia exhibit opposite trends, indicating regional differences in the dynamics of the real estate market.

3. Changes Among Foreign Buyers

During the same period, acquisitions of real estate by foreigners fell by 13.6%, with varying proportions by country. More specifically, the decrease amounted to 26% for Germany (from 1,717 to 1,274 transactions), 5% for Slovenia (from 1,544 to 1,466), 29.5% for Austria (from 772 to 544), and 17% for the Czech Republic (from 386 to 321). In contrast, Slovakia recorded an increase of 12% (from 274 to 307).

4. Special Focus: Zagreb

Focusing on the capital city, Zagreb represents a key component of the national real estate market. Zagreb records the largest number of apartment transactions in the entire country, and here there has been a significant drop in the number of transactions. In the period from January 1 to November 30, the number of sold apartments fell by 28% – from 9,379 in 2022 to 6,771 in 2023.

5. Seasonal Effects

Traditionally, December and January are months with a lower number of transactions due to holidays and annual vacations. This is a pattern that repeats and can help in understanding annual trends.

6. Conclusion and Predictions

Looking at the bigger picture, it becomes clear that the real estate market in Croatia is facing a period of “cooling”, a trend that is also reflected in external emissive markets, especially in Germany. Germany, as the leading country in terms of the number of foreign buyers in Croatia, records a decrease in the number of transactions, as well as a significant 10% drop in real estate prices. These global trends further enhance caution among investors and buyers in the Croatian market.

This market cooling is the result of several factors: an increase in mortgage interest rates from 2% to 4%, the end of state subsidies for young people under the APN program, and a continuous increase in real estate prices over the past 8 years (from 2015 to 2023, the increase amounts to 74%). All these changes lead to a more cautious approach among buyers. For 2024, projections indicate stagnation in price growth, with potential drops in less attractive locations or for lower-quality real estate. However, in attractive locations and in the segment of luxury real estate, price stability is expected due to limited supply.

At this point, investors and buyers must carefully approach these market changes to maximize their investment potentials. This period of change requires thoughtful approach and strategic planning to successfully navigate through market turbulences.

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