Real estate market retained stability in 2023, further stabilization expected in 2024

Zagreb, March 15, 2024. - The leading Croatian real estate agency Opereta has published a detailed review of the state of the Croatian real estate market in 2023, based on long-term monitoring and collection of data on supply and demand. Despite numerous economic challenges, the real estate market remained stable in 2023. In 2024, activities are recorded which point to further market stabilization. The authors of the review are Jelena Kravoščanec Todorović and Martina Mataić Škugor. It is evident from the review that the first half of 2023 was characterized by increased dynamics caused primarily by the record number of submitted and approved requests for subsidized housing credits (APN loans) as well as a high interest from foreign buyers, which was further boosted by the entry into the Schengen zone and the introduction of the euro as the official currency. "In the second half of 2023, the market slowed down," it is partially explained, "due to the economic crisis on the German and Austrian markets, and due to the increase in commercial bank interest rates. However, despite these challenges, over the past year house deposits have grown by a rate of 1.4%, and housing loans to households by a rate of 9.5%, with the largest growth in non-purpose cash loans by a rate of 11.1%", emphasizes Martina Mataić Škugor. Regarding purchase and sale transactions, related to the purchase of construction land, a flat in/apartment and a house, the data from the Tax Administration for 2023 show a decrease of -2.60% compared to the previous year. A total of 57,554 transactions were carried out, with the largest contribution being made by apartments/flats (49% of the total) and construction land (43%).

Source of financing for real estate

According to Opereta, purchase of real estate with own funds prevails (56%), although it should be noted that it is often a series of consecutive transactions, with the first being most often financed by a business bank loan. Real estate purchased by foreigners are most often financed with own funds, which further contributes to the high share of payment with own funds in the total number of transactions. Young people between the ages of 30 and 45 were the most frequent purchasers in the first half of 2023, a consequence of the mentioned APN loans, while those older than 50 years old purchased real estate as an investment or for their children.

Real estate in the city of Zagreb

“Buying real estate in Zagreb is most often motivated by buyers who do not live in Zagreb in order to secure housing for their children who are coming to Zagreb for schooling and/or in order to have a potential short-term or long-term rental investment. A common reason is also the purchase of the first real estate by those buyers who have previously been sub-tenants," emphasizes Jelena Kravoščanec Todorović. The most sold apartment sizes in Zagreb were those of up to 65 m2, which was also the most sought-after size for APN loans. Opereta states that the average time required for selling an apartment in Zagreb is 3.7 months, with the difference between the requested and realized price being 7.3%. When it comes to preferences for Zagreb neighborhoods, Trešnjevka North is the most sold neighborhood with 15% share, followed by Trešnjevka South with 13% and Novi Zagreb – East with 11% share. The Center and Maksimir maintain a faithful client base with 10% each. The smallest interest in buying apartments in 2023 was recorded in the Podsljeme zone, which is interesting for both building and buying a house.

First observations for 2024

Initial analyses for 2024 indicate a continuation of stability in the real estate market, with continued increasing demand despite a smaller supply of real estates. From Opereta, it is emphasized that demand for buying remains high, while supply is lagging, particularly highlighting the shortage of apartments of size between 45 m2 and 65 m2. These data indicate a long-term trend of high demand compared to limited supply, particularly in the segment of smaller apartments.

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