Analysis of Croatian Property Market Trends – Will Prices Fall in 2024?

Croatian Property Market Shows Signs of Cooling, Will Prices Fall?

March 14th, 2024 – The Croatian property market has been a hot topic lately, with prices soaring to new heights. Analysts from the RBA have delved into the burning question of whether these high prices will eventually fall.

Recent data analyzed by Poslovni Dnevnik and N1 indicates a cooling off period in the Croatian property market. Despite this, there remains a significant gap between the prices requested by sellers and the prices actually realized from transactions.

The property market in Croatia showed signs of stagnation towards the end of 2024, with a decrease in the number of completed transactions and a slowdown in overall price growth.

According to the Tax Administration, the number of apartments sold in Croatia decreased by 6.9 percent from 2022 to 2023. Foreign buyers also showed a decline in interest, with a 25.7 percent drop in purchases of residential properties.

While the volume of transactions has decreased, there has been no significant drop in prices in the Croatian property market compared to other European countries. The average price per square meter of a new apartment in Croatia saw a 2.7 percent increase in 2023.

In Zagreb, the average price per square meter of a new apartment rose by 4.1 percent compared to the previous year, reaching 2,684 euros.

There is still a significant difference between the advertised prices of used apartments and the prices realized in transactions. The average difference across the market is about 15 percent, rising to over 20 percent in Zagreb.

Despite the drop in demand, realized prices have not seen a significant correction. Analysts from the CNB believe that a sharp decrease in property prices is not expected at the moment, as domestic demand remains stable due to favorable economic conditions.

The risk of a major market reversal is being mitigated by factors such as a strong labor market, income growth, and stable interest rates on housing loans. While foreign demand has decreased, the number of new housing loans has only seen a moderate decline.

Overall, the Croatian property market is showing signs of cooling off, but a significant price drop may not be on the horizon just yet. Stay tuned for more updates on this evolving situation.