In Central and Eastern Europe, crisis has significantly changed the way of doing business when it comes to residential real estate, but many people are still planning to purchase new property. In fact, research shows that quality housing is still missing.
During the past few years construction of new apartment buildings and houses was in constant growth, but despite this demand was always much greater than supply. Economic growth and wage increases led to a situation that most people, although some were already property owners, sought to improve their housing standards. Given this market situation, there is great potential for further development. In fact, most of the apartments in Croatia and the region was built during socialism so their quality is not nearly at the level of those in European countries. This situation also encourages many to sell their old apartments and buy new ones, which especially applies to some areas on the Adriatic coast and outside the big cities, where new investments in the construction of apartments and houses are expected the most. Unmet demand and weaker quality of housing are the best guarantee that property market in Croatia will not break.
But one should bear in mind that the current macroeconomic situation in the region is favorable as before. Potential for growth still exists, but banks have set new criteria for loans due to high risk, so capital is now unavailable to both citizens and investors. However it is the opinion of most experts that there will be only short-term slowing of the market, while in the long term we can expect stable growth with perhaps a somewhat different price policy.

After the Croatian VAT was increased from 22% to 23% and a new “crisis tax” introduced on all earnings, it seems that a new Croatian real estate tax is already being planned.
No details related to this tax are known, but it is mentioned that only second and third real estate will be under taxation. Some economic analysts believe that taxation of property, including real estates, is a good decision, but that this should also lead to a decreased taxation of work and wages. One of the possible models could be the taxation of only a part of living space depending on the number of residents, which would mean that only an “excess” in square meters would be taxed. Other possible solution would be not to tax the number or living space, but only the value of a real estate. Except from this real estate tax, there is also talk about new taxes on dividends and profit from selling shares and companies.
To summarize, we can only wait for the new state budget for 2010 to be absolutely sure what the Croatian government will “cook” next.

There are no buyers in the Croatian real estate market and prices have fallen significantly during the past year. Some of the agents feel that the prices will decrease even more in the next year, but most analysts agree, however, that now is the optimal time to buy.
Prices on the most attractive locations such as Istria or Dubrovnik are now a lot more realistic than before, while at the same time the influence of the financial crisis resulted in significant changes in demand for real estate from abroad, especially when it comes to buyers from the UK, which are now much less numerous than before. Beginning of this year brought a very bad situation and soon there was more than 10,000 unsold flats. Even the law of equalization of foreign buyers with residents of Croatia didn’t bring significant progress. Despite all the problems Croatia is still a very attractive tourist destination, which has so far this year recorded better results than other well known destinations such as France, Spain or Italy, even with the crisis raging all over the world, which makes it extremely interesting to all real estate investors. The beauty of the Croatian coast and small towns charms all visitors, but be warned on the necessity to employ a good lawyer and real estate agency. Many proprietary relations are still unsettled from the time of socialism, so one must be careful that the investment in a nice new home does not turn into a legal hell in Croatian courts, which are among the least efficient in the world.