Reduced demand for the center corresponds to the increased attractiveness of life outside the city and the trends triggered by the pandemic.

Trends of life outside large cities triggered by the pandemic had a greater impact on the decline in property sales in the Zagreb area than the effects of the earthquake, according to the author of the professional article published on HNBlog on Monday. Authors of the article "The impact of the pandemic and the earthquake on the real estate market in Zagreb in the first half of 2020." - HNB director of modeling Sector Research Davor Kunovac and advisor in the Modeling Department Karlo Kotarac - in order to analyze the simultaneous impact of the earthquake on March 22 and the declared pandemic on March 11. on the formation of real estate prices constructed a number of specific real estate market indicators for the city of Zagreb using data from the Tax Administration on the sale of real estate. Weakened by 10 percent "Performed analysis showed that the prices of sold real estate in the city center of Zagreb and in Donji Grad, where real estate was most densely damaged in the earthquake, decreased by 10 percent compared to the same period last year," say the article authors. According to the data they provide, "the number of properties sold in Zagreb in the first half of 2020 is lower by about 22 percent compared to the same period last year and does not seem dramatic if we consider the usual fluctuations in the number of transactions in previous years." Kunovac and Kotarac point out that the intra-year dynamics of the number of sold real estate has changed since 2017 when the program of subsidized housing credits was introduced, and a large number of transactions is now concentrated in a short time interval when applications for subsidies are opened. However, unlike in the previous two years, the decrease in the number of transactions this time lasts longer, until May 2020 when, in parallel with the relaxation of epidemiological measures and a new round of subsidized housing, the number of transactions approaches the average of the previous two years. "The number of properties sold in the city center of Zagreb, especially in Donji Grad, where real estate was most densely damaged in the earthquake, declined by half in the last months," say Kunovac and Kotarac. However, they also emphasize that the reduced inclination towards buying real estate in the city center should not be attributed primarily to the earthquake. "Indicators show that the number and share of transactions related to the zone damaged by the earthquake begin to decline a few weeks before the earthquake. This decline in activity on the real estate market corresponds to the increased attractiveness of life outside the city center and new trends in the lifestyle triggered by the pandemic, such as maintaining a physical distance or working from home," emphasize the authors of the article. Newer apartments are not in demand The pandemic is, as further emphasized by the authors, closely related to the reduced demand for tourism in Zagreb. Consequently, there is less demand for real estate in the city center with a tourist purpose, while at the same time the offer of apartments for long-term rental or purchase in that part of the city is increasing. Their analysis also suggests that the change in the inclination towards life outside the city center after the earthquake is not, as is sometimes claimed, primarily determined by the increased demand for newer real estate built after 1964 when the first anti-earthquake building regulations were introduced. Namely, the comparison of the indices of prices of older real estate showed that the price of these real estate in the old part of the city was decreasing in the analyzed period, while the price of real estate built before 1964 in other parts of the city was increasing in that period. source: poslovni.hr

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