One of the last ideas was that the state offers financial help to jobless buyers of flats to facilitate the situation by paying their loan rates for a couple of months. The idea was dismissed from the government.

Banks have announced lower interest rates on housing loans and more flexible conditions when approving them. The government has also jumped into the market with incentives that should boost sales. Unfortunately, this leads sellers to believe that a new building can hold unrealistically high prices of flats. It is not constructive and sellers who have demonstrated good will as far as prices are concerned have no problems with sales. Customers are most confused. They are hearing about incentives and favorable conditions for purchase from all sides, but all this has no effect if prices do not fall at least a little.

What about second-hand flats? The situation is colorful. You can get a rather good price, but still there are sellers who sell by all kinds of “strange” criteria because of which their price is unrealistically high. They are convinced that they live in the best location in town, how they are experts for real estate in Croatia, who know exactly how the prices will move in the future, that their furniture is worth more than double the real amount and that the prices on the internet portals are realistic. It is simply not so! If you get a realistic and good offer for an apartment, then accept it, because the market will not have customers packed full of money as it was before the crisis for a long time.

To immediately say how things stand with this question: There is no answer! All are divided over this issue - economists, builders, real estate agencies… Nobody offers answers, just ask new questions.

The government has also stepped into the market with incentives, but the initial enthusiasm disappeared after some new questions. Who are all these incentives for? Citizens will not benefit too much, neither will builders, because the possible sale of 1,000 dwellings does not resolve the question of the other 10,000. It seems that only the bankers will benefit. Some analysts even believe that the Government measures cause prices to fall 10-15%, but these are just speculations.

What about all those who have the best insight into the market, real estate agents in Croatia? Their opinions are also divided. About half of them believe that prices will fall, a little less that there will be a long period of stagnation, and only slightly less than 10% that prices will rise. However, it is interesting to return to the previous year when almost two thirds of agents expected a price drop, about a third predicted stagnation, and only just over 1% predicted growth. Something has changed during the last year. Whatever the case, one thing can be said with certainty, and that is that the prices are unlikely to increase, at least for the coming months. As for them dropping, the lower price are actually already there, only not at the required rates, but in realized sales. In addition to general price movements, everything is seen differently depending on location and property type. Some properties just always keep their price, so it is considered that real estate on the Adriatic and vacation cottages will retain value. Everyone also agrees that the cost of new buildings is a bit inflated.

Price drops are also predicted with rent prices, regardless of whether they are houses or apartments, and it already started with significant discounts in commercial real estate. I personally know a couple of small tradesmen who had no problem with lowering the rental price for their offices and facilities. It’s simple: It is better to sacrifice a little than risking that the tradesman leaves you or even perishes. In these economy conditions, it would probably mean a longer term “liberation” of space for an office.

Until when will this uncertainty last? It is difficult to predict, but it is fairly safe to say that entry to the EU should bring some stability to the market.

Suppose that a Croat with an average salary wants to buy an ordinary one bedroom apartment with a living room for some € 80,000. How to get credit for such purchases? Fairly easy if you are willing to offer a mortgage and are able to find two guarantors with above-average salaries in these economic conditions. Sounds simple enough? You may have another property to offer a mortgage? Then you don’t have to find a guarantor! Of course, it is desirable that the guarantor’s pay is completely unburdened. There are a lot of people like these in Croatia, right?
Croatian newspapers Vecernji List made a survey among banks and customers. Payment of loans is getting worse, so credit conditions toughened. Some banks have a maximum amount of installment in relation to the salary, some have conditions that you need a guarantor or not, some are looking for life insurance, some determine the maximum loan amounts in relation to the value of the property … Each bank has different policies.
Potential buyers are quite disappointed with such a situation and often give up on buying their apartment. All are hoping that government incentives in the housing market in Croatia will bring some changes that could facilitate availability of loans, but the whole situation is not encouraging.
Croatian property market is in great crisis, and neither the banks nor the Government are not ready to make any concrete measures to change it. Of course, the government announced incentives, but their impact is uncertain and it is questionable whether there will be any significant change. Most economic analysts agree with this. The banks also do not help very much. Extremely stringent credit conditions do not lead to anything in the long term. Without money there is no investment, no new buildings, no jobs and without all that there no new cycle of growth.
This situation is not good for anyone in the market. Croatian real estate agencies and construction contractors are facing the future with great interest and uncertainty.

New provisions in the law permit a saving society to be actively involved in the construction by lending to the market the amount limited with the height of liable capital. This amount is currently 500 million for five largest savings societies. This figure is indeed impressive and its release could significantly improve the situation on the property market in Croatia. However, is it a worthwhile job? Would new housing in the current conditions ever find buyers?

Leading personnel from the biggest savings societies, which are mostly already part of large banking groups, believe that there is no sense that they perform work for which their parent companies are already responsible for, that is the banks. This is somewhat understandable because the banks already have a lot of big problems with construction companies, so there is no sense that the same problem gets pushed to the savings societies. On the other hand, there are societies that are not a part of banking groups, but act independently on the market. What will they decide?

Perhaps they are most likely to turn to their existing customers and move them in into “complete” buildings. This would mean that they would first start testing to determine whether it is possible to arrange their own customers to buy entire residential buildings, and if not then other savings companies and their customers would be included. This model could prove successful, especially in larger cities where there are a lot of clients.

The main goal of the whole project would be to effectively close the investment. Thus, the savings banks would credit savers, who would pay to construction entrepreneurs, and these would immediately return loans. Quickly and efficiently! Of course, most projects that could be financed would be smaller residential buildings, while some megalomaniacal projects would be out of the question.

Despite the fact that all together it sounds interesting, we need to wait to see what will happen with the long anticipated government incentives for the purchase of already built flats. It simply does not make sense to move in on any new revolutionary projects while the fate of thousands of unsold buildings is not resolved.