Always has been a trend of rising property prices when interest rates fell, and when they rose, it was a downtrend, said in the central HTV News Dubravko Ranilović, chairman of the Real Estate Trade Association HGK speaking of experience with the real estate market in recent years

Such a situation was in 2001. When more favorable interest rates arrived, property prices began to rise, said and reminded of 2008, crisis time, when, as he says, the same interest rates rose. He emphasized that the current rise in interest rates expects slowing down on the market. ‘In Croatia, the results of 2008 came a bit later. See how long our recession and crisis were. The real estate market recovered until 2015’, he emphasized for HRT.

Interest rate rise reduces demand

When asked if a decline in demand and a decline in prices could be expected, Ranilović said that this depends on how much interest rates will rise. ‘Rising interest rates definitely reduce demand due to a number of other circumstances. We see that the real estate market in EU countries has almost halved. First, a decline in demand should follow, then a slowing down of trade with fewer transactions, and only then, as it is a subjective view of the seller, a price correction should follow’, he added.

He points out that one should be aware of the prices being sought, as they are not the same as the realized ones, especially in the case of existing properties. Last year, the prices of real estates that were sought have increased by 20%, while the realized ones increased by 12 to 14%. Ranilović states that there is not currently talk of a ‘real estate bubble’ in Croatia. ‘It's not even close to what it was in 2008 when there were unrealistic credit, unrealistic expectations and unrealistic prices’, he added.

He reminds us that in Zagreb, the residential estate of old buildings is poorly maintained, and the earthquake has radicalized it. ‘Everyone looks at new construction, to feel safer, as security has become a key factor’. In Croatia, very little is being built, says Ranilović. ‘Apart from apartmentization in the coastal area, very little is being built in the continental part. In Zagreb, there is a great potential for new construction, while the situation is different regarding used houses’. In addition to rising property prices and interest rates, the prices of rentals are also rising. When asked whether the state or the local government should be more involved in building to enable young families to have accommodation in rent under some more favorable conditions, Ranilović said that he believes the state and the local government should work together on this, and what they do in EU countries is that the local level there encourages this more. Along with the existing rise in property prices, especially in the coastal area, Ranilović confirms that people with solid incomes do not have a place to live there. ‘Everything is turned towards tourism and apartmentization, and properties are overpriced’, said the chairman of the Real Estate Trade Association HGK.

Preuzeto s: Poslovni.hr

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