Co-ownership is a situation in which several subjects appear as owners of one thing, in this case a real estate. In such cases the facility is not physically “divided,” but legally speaking “shared” in several parts of the total value. This means that an individual co-owner can not claim to have exclusive rights of management over the property, and no one can usurp a single part of the house/apartment, for example bedroom, kitchen and so forth.

Property can also be distributed differently, for example, by content, which would mean that one co-owner may have the right of disposition, and others for use of the property. Co-ownership creates a special community among individuals, and it can occur by legal affairs, decision of the authorities or by certain laws. The way in which they co-manage the property is agreed between them or by voting. Such situations often lead to disputes and because specific actions are necessary to maintain the property, and some emergency actions to prevent its deterioration or make a sale, the decision may come through the courts. A good idea to facilitate decision making is that all co-owners decide to appoint a joint manager of the property.

Each co-owner of can dispose of his part and that means he can sell it. In such cases other co-owners usually have a right of first-buy, but it is not an obligation.

Indications of economic recovery in Europe, the fall in property prices on the Adriatic and the strengthening of the pound has again awakened the interest of foreigners to buy property in Croatia. Many Croatian real estate agencies say that they have some realized and announced contracts for 2010, but they also pointed out that customers are still more interested in cheaper properties, such as small vacation houses, while luxury properties remain unsold.

The crisis almost destroyed the housing market last year, but it also significantly affected the attractive real estate market on the Adriatic. Now, the things are moving towards a little recovery and it all starts in the North Adriatic and Istria. The main reasons for this are the recovery of economies and the strengthening of consumption in Western Europe. Foreigners are again up on their feet and they have returned to the Adriatic, which was always an attractive location, but, as mentioned in the beginning, they want only property that can be obtained cheaply. Some experts claim that it was the the fact that sellers are willing to significantly lower the prices that caused the apparent “recovery” of the market, and that the real situation will show in the coming months.

Otherwise, as far as the preference of customers is focus, except the price it is important that the real estate be close to the sea, and buyers are mostly looking for small vacation houses and apartments, agricultural land and olive farms and vineyards. What gives us even more reason for optimism is the fact that there are many investors who frequently contact agents and are interested in new projects.

However, some old problems are still there, although it was expected that the crisis will encourage their resolution. Primarily we mean the catastrophic situation in the land registry, unresolved ownership relations and the low quality of real estate. In combination with overestimated prices, this is the problem that repulses foreign customers. Foreigners just know exactly what they need, and they know and how much it is really worth. On the other hand, Croatian sellers often make unrealistic prices determined on the basis of totally subjective factors, which has already been mentioned in a lot of words in some previous articles. This situation leads to the creation of a balloon on the market, as there are more and more real estate buyers who are looking for property, but they are certainly not buying because of the huge price. This is an unsustainable situation to which, unfortunately, there is no end in sight.

We have already mentioned in one article that the new government measures on encouraging the purchase with a 200 euro loan could potentially mine the housing market, but the fact is that the markets of Southeast Europe are exaggerated and we were all warned several years ago by a famous doctor of economics from American University of Ohio, Bulgarian Krasimir Petrov.
This expert estimates property values by the two basic indicators used in the West, namely the ratio of rental and property prices and the ratio of prices to average income households.
The first indicator is generated in a way that the annual rent is divided by sale prices, and thus you get the return on investment. The American practice of normal return is 10-12%. Return of 15-20% means that the property is probably undervalued, while 6-8% or lower means that a property is overvalued and the entire market bubble could burst. If we take into account the fact that in recent years we have have reported figures of 3-4% throughout the region, it is quite clear in which position we are in. Average square meter for apartments in Croatia is 1818 euros, and rent has been the same for years, so the indicator is 3,5.
Another indicator (the ratio of prices and household income) shows how many annual gross earnings are required to purchase a property. If you need one, it’s an undervalued property, two show a normal price, and three indicate an overestimated value. In Croatia, the average gross salary is 1070 euros, and if we consider that we have two working adults per household, for a flat of 65 square meters with the earlier mentioned price of 1818 euros, a household needs to set aside 118,170 euros. This means that for such an apartment five years of savings are needed, and if we consider already three years mean that the property is overvalued, the conclusion about the property prices in Croatia imposes itself. To conclude, according to Petrov and his formula, the price of a square meter in Croatia should be approximately 600 euros.

A lot of questions arose since government announcements about encouraging the purchase of housing loans with 200 euros per square meter. It is only the average loan amount and each amount in the end will depend on the size of the apartment, while the maximum price for the square meter will be 1600 euros. In this way the State is trying to encourage the reduction of prices, which are unrealistically high according to some experts. The largest amount will be given to the price of 1,200 euros, a whole 300 euros, while for 1,500 the buyer will get only 100 euros. Loan period is 20 years and interest rates should be within the existing POS system, which is 4-5 percent, although the Government is looking for ways to make the amount even more reduced. Except for the fact this is the way to encourage trade, the aim is to inspire new building and stop layoffs. There are many arguments that support the government’s plans, but there are also those who say that it is an inefficient and an interim measure. All generally agree that in the beginning they will be able to sell a certain number of apartments, but also argue that for a more significant shift a lot of decisive action is required, especially regarding the great benefits that need to be payed to the state and local government, of which the largest contribution is the communal cost. The problem could also be that this measure favors small investors who have built flats in cheaper locations, where the land is purchased by a lower price, and to them it is not much of a problem to drop the price. In any event, the fact is that the announcement of these measures has now only even more slowed the real estate market in Croatia, because everybody is hoping for a loan and wait with the purchase of an apartment. This is not good neither for merchants or constructors, which could decide for new investments for now is the most favorable moment due to reduced prices of land and construction materials. In any case, the value of unsold apartments in Croatia is estimated at 8 billion kuna, which is an amount that would much contribute to recovery of the entire economy.