The governor of the Croatian National Bank, Boris Vujčić, has stated that real estate prices across Croatia have started to fall due to the Covid-19 pandemic.
In an interview for RTL Vujčić was asked about the situation of the real estate market in Croatia in these turbulent times for the economy. “What we can see at the moment is less turnover in the real estate market and that prices, as far as we can now estimate, although we do not yet have statistics, have already begun to fall. Real estate prices have declined, that is, the strong growth we saw by the first quarter of 2020 has now reversed to a trend of slight stabilization or declining prices, depending on which market segment we are talking about,” commented Vujčić on real estate prices in Croatia.
He added that “We do not predict by what percentage housing prices will fall. But we now see that prices in the summer no longer grew as they did until the first quarter.”
The housing market is an important factor in Croatia’s GDP, with around 10 percent of the GDP coming directly from real estate. Tourism is naturally connected to the real estate market, as new hotels, resorts and apartments spring up every year, mostly along the Adriatic coast. In this chaotic year tourism investment has been almost completely stopped.
When questioned about real estate prices falling further, the governor of the Croatian National Bank commented that “If you go to Njuškalo (a popular Croatian retail website) and look at the asking prices for the sale of certain apartments, you see that a lot of people say that they have already lowered the prices because of everything that happened. And of course, Zagreb and the coast are different markets from the rest of Croatia.
Banks have been seemingly tightening their belts since the Covid-19 pandemic began and making it harder than even for people to take out loans or mortgages. But when asked would it be even harder for people to get a loan this autumn the governor was upbeat, “No, as for loans, the situation is as follows. Interest rates are lower than ever. If we talk about housing loans, we had interest rates that were around 3 percent in 2019 and by 2020 they had already dropped to almost 2.5 percent, meaning to their historical minimum.”