House prices in Croatia have significantly increased in the last few years, leading to growing difficulties in affording housing, especially for young families. While the high price per square meter is often highlighted as the main issue, the situation is more complex. Market analysis shows that the problem is not only in high prices, but also in relatively low incomes of citizens.

Comparison with other European countries clearly shows that Croatia has one of the lowest price-to-income ratios. While in Denmark, considered one of the most expensive countries for housing, the average citizen needs to set aside 114 monthly salaries to afford a 100 m² space, in Croatia it is necessary to budget 238 salaries for the same space. This data indicates that the problem of affordability of housing in Croatia is multifaceted and requires a comprehensive approach.

Historical context

The development of the housing market in Croatia has been marked by numerous changes. After the turbulent transition period, joining the European Union brought significant investments and stimulated tourism growth, further fueling house prices, especially in coastal areas. At the same time, salary growth did not match the growth of prices, resulting in an ever-widening gap between income and housing costs.

Impact of global trends

Global economic trends, such as rising inflation, increasing interest rates, and the energy crisis, have further exacerbated the situation. Rising interest rates have increased the costs of housing loans, reducing citizens' purchasing power. Simultaneously, rising energy and other essential commodity prices have further burdened household budgets, leaving less room for housing expenses.

Comparison with other countries

To better understand the situation in Croatia, it is essential to compare it with other European countries. In addition to the price-to-income ratio, other indicators such as:

Average wages: Comparing average wages in Croatia with those in other EU countries.
Interest rates: Comparing interest rates on housing loans in Croatia with those in other countries.
Unemployment rate: Comparing the unemployment rate in Croatia with the EU average.
Living costs: Comparing the cost of living in Croatia with living costs in other countries.
Rent-to-income ratio: Comparing the rent-to-income ratio in Croatia with other countries.

The measures taken by the Government so far to increase housing affordability, such as housing construction incentive programs and subsidized interest rates on housing loans, have had some positive effects. However, they have not been sufficient to fully resolve the problem. One reason for this is that these measures have often focused on short-term solutions, neglecting the long-term causes of the problem.

The problem of housing affordability in Croatia is complex and requires a comprehensive approach. A combination of measures focused on increasing housing supply, improving citizens' purchasing power, enhancing access to credit, and increasing transparency on the property market can lead to significant progress. However, it is essential to emphasize that there is no quick and easy solution. Resolving this problem requires a long-term and coordinated approach by all relevant stakeholders.

Source: Best Brokers

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