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European Central Bank Warns of Chaotic Decline in Croatia's Real Estate Market as Interest Rates Surge

Written by  Jun 02, 2023

The sharp increase in interest rates in several decades is spilling over into the real estate market.

Prices of residential properties in the Eurozone could experience a "chaotic" decline as apartments become unaffordable for citizens and unattractive to investors due to high interest rates, warned the European Central Bank (ECB) on Wednesday, as reported by Poslovni dnevnik.

Croatia is part of the Eurozone, and this applies to our country as well.

This is one of several risks highlighted in the ECB's financial stability analysis, along with higher borrowing costs and slower economic growth, which are detrimental to businesses and households.

Since last July, the ECB has been trying to contain inflation by raising interest rates, and it appears that they will persist with a strict monetary policy in the coming months, as analyzed by Reuters.

The strongest interest rate hikes in several decades are now beginning to be felt in the real estate market, which experienced a boom during the decades of accessible and affordable loans.

"Looking ahead, the decline in property prices could become chaotic as rising interest rates on new mortgages increasingly threaten their affordability and increase the burden of interest on existing mortgage loans," warned the ECB.

The sharp increase in interest rates in several decades is spilling over into the real estate market. Prices of residential properties in the Eurozone could experience a "chaotic" decline as apartments become unaffordable for citizens and unattractive to investors due to high interest rates, warned the European Central Bank (ECB) on Wednesday, as reported by Poslovni dnevnik. Croatia is part of the Eurozone, and this applies to our country as well. This is one of several risks highlighted in the ECB's financial stability analysis, along with higher borrowing costs and slower economic growth, which are detrimental to businesses and households. Since last July, the ECB has been trying to contain inflation by raising interest rates, and it appears that they will persist with a strict monetary policy in the coming months, as analyzed by Reuters. The strongest interest rate hikes in several decades are now beginning to be felt in the real estate market, which experienced a boom during the decades of accessible and affordable loans. "Looking ahead, the decline in property prices could become chaotic as rising interest rates on new mortgages increasingly threaten their affordability and increase the burden of interest on existing mortgage loans," warned the ECB.

The Voice of Dubrovnik

THE VOICE OF DUBROVNIK


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