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.

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.

It is difficult to determine which is the right time to move into such a serious investment like buying a new apartment or house. There are lots of obstacles and it is important to pay attention to some of the most common mistakes.

Do not think too much about the situation on the market. It is useless to wait for the market to touch the bottom because then you will never make a decision. Real estate market in Croatia is at the moment, unfortunately, faced with this problem. When choosing to buy you should always have the market situation in mind, but above all consider whether you are able to financially sustain a purchase. Too much thinking can sometimes take you in the wrong direction.

You always leave yourself room for financial maneuvering. In addition to costs such as loan and arranging, some unexpected expenses can always come up, so be smart enough to take such problems into account in advance and create a fund to handle these kinds of crises.

When you buy property in Croatia you should always have a qualified lawyer and an agent from a professional Croatian real estate agency. Despite the fact that they will check all the legal details and put together a favorable contract, always be sure to check all items of the contract yourself in the end.

Thoroughly check the property you intend to buy! Every day we read in newspapers about the various stories related to the problems after the purchase. Today you simply can not be sure whether the property you are buying is all right, even if it is a completely new building. Take some experts who understand construction with you to review and the real estate objectively assess the situation. Do not take risks and buy at the first sight only because you have fallen in love with your new house or apartment after the first inspection. This is a one way street towards the purchase of a bad property or failure to catch better opportunities. In addition to checking the property, check the neighborhood too. It makes no sense to live in hell with noisy and problematic neighbors.

Finally, always bear in mind that your finances are not limitless and have a cost plan before you purchase. You may think you can afford a loan for a house or apartment of your dreams regardless of the loan amount, but is there any sense to go into too much debt and later barely survive the month. Be humble and rational, do not you let your life in a new home lead you into a financial collapse.