Domestic real estate market is still waiting. According to agent claims, no significant price correction has occurred despite the economic downturn due to the coronavirus and the earthquake in Zagreb. Market radicalization is expected in the fall, when a significant decrease in the price of certain real estate can be expected, but on the other hand, the value of high-quality apartments may increase.

Dubravko Ranilović, president of the Real Estate Business Association within the Croatian Chamber of Commerce and owner of the Kastel Agency, emphasizes that the market is stagnant.

'Sellers are not lowering prices, and buyers are not inclined to accept those values. Due to reduced demand, the real estate trade has significantly decreased. In some parts of Croatia, it has fallen by as much as 50% compared to last year,' Ranilović said for tportal.

He predicts greater market shocks after the summer. The deepening of the coronavirus crisis will prompt many to make tough decisions.

'I expect a radicalization of the market in the fall and winter, when those owners of real estate who have to will have to make decisions. They will have to face reality and accept market prices for their real estate. Many owners are still unrealistic. Some are asking too much for used apartments in older buildings. Prices need to come to a more realistic framework. Of course, this does not apply to all real estate.'

He recalls the recession of 2008, when price corrections did not start until eight months after the outbreak of the crisis.

The market has also reached a significant polarization in terms of prices according to the characteristics of individual real estate.

'There has been a great polarization in the value of real estate according to its quality and location. It is possible that in the same street in Zagreb, an apartment can be worth 4000 euros per square meter, but also 1000 euros per square meter,' Ranilović said.

The conclusion that can be drawn from this crisis is, he emphasizes, that there is no more generalization.

'Each real estate and situation must be approached individually. Certainly, the prices of some real estate will fall, but some will maintain their value, and some will even experience a significant increase. In a time of crisis, real estate is still a good investment. Many will therefore redirect their capital to buying an apartment, land, or a house,' Ranilović expects.

A similar view on the market is shared by Boro Vujović, owner of the largest Zagreb agency Operete. However, he also points out that unlike in previous months, the market came to life in June.

'We had more sales in June than in the same month last year. However, this is only our experience. Many agencies, especially smaller ones, are still recording a significant drop in traffic,' Vujović said.

He also claims that there has not been a significant correction in prices despite all the troubles. A notable exception are somewhat older apartments in the city center of Zagreb.

'The average price for these apartments is around 2,000 euros, whereas before it was around 3,000 euros. I believe that 2,000 euros is still too much, but there are people who are willing to pay even more. Usually, these buyers have not experienced the shock and have no trauma,' Vujović explained.

A noteworthy phenomenon is the increased demand for homes and land. He attributes this to the consequences of the coronavirus epidemic and the earthquake.

'During the quarantine, many people were uncomfortable being confined in smaller apartments. Furthermore, a new home or building a home means that you are safer from an earthquake. When you build yourself, you exactly know how much concrete and armature you have,' Vujović said.

He is cautious in predicting the state of the market in the fall. He is not sure if there will be a price correction because, during a recession, people are afraid of the value of their money decreasing, so they are looking for a safe haven in gold, and also real estate.

It also depends on whether the state will continue with the program of subsidized housing loans through the Agency for Property Mediation and Agency for Legal Business (APN), which would further stimulate the market and ease the correction of prices.

source: tportal.hr

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