With Croatia still reeling from the recession, its housing market continues to suffer with falling prices and sales.
Even the once-resilient Adriatic Coast property market is not spared from the downturn.
The national property price index for advertised houses in April 2010 was lower by 4.4% compared to a year earlier and 0.35% from the previous month, according to CentarNekretnina, the largest Croatian property portal. It was the 13th consecutive month of price falls.
In Zagreb, the capital, the price index was down 3.4% y-o-y to April 2010. The average price of flats in Zagreb was €1,865 per sq. m., down by 3.8% from a year earlier. The average price of houses was €1,273 per sq. m., lower by 1.9% over the same period.
For properties along the Adriatic Coast, prices fell even more. The price index was down 5.8% y-o-y to April 2010. The average price of flats was €2,055 per sq. m., down by 10% over the same period. While the price of cottages and apartments was lower by 6.9% y-o-y to €1,950 per sq. m., the price of houses was unchanged from a year ago at €1,596 per sq. m.
Property prices are expected to fall further due to the weak economy. After contracting by 5.8% in 2009, Croatia’s GDP is expected to fall by around 1% this year. Falling wages and the high unemployment rate (17.8% in May 2010) dampen housing demand.
Changes in the corporate income tax, effective July 1, are expected to add more downward pressure on house prices. There are about 70,000 foreigners who own property in Croatia, mostly in Zagreb and along the Adriatic Coast. Due to complexities regarding taxation and foreign ownership rules, most of them bought through a company. The new rules are expected to lead to higher effective taxes for foreign property owners.
|
Article Details