The first wave of price increases this year followed the announcement of the tender, and the second followed the tender announcement. According to property agent estimates, prices rose by 50% compared to June and July, thereby completely negating the effect of subsidies.

On the first day, the Agency for Legal Transactions and Property Mediation (APN) received 60, and by 11 am the next day, 129 applications for subsidized housing loans were received. This is significantly fewer than last year, when most applications were submitted on the first day, and bank delivery services were already waiting outside the Agency the night before the application period began.

There is no congestion this year, though one immediately began speculating whether the state's measure to help young families buy their first property had been missed.

The main problem is the market's reaction: according to data from the advertising portal Njuškalo, real estate sellers have raised prices by 6.73% compared to last August, and by 16% in Zagreb, or €266 more per square meter compared to the year subsidies were introduced.

The first strong wave of price increases this year followed the tender announcement, and the second followed the announcement itself. According to estimates by property agents, as written by Jutarnji List, prices rose by 50% compared to June and July. Of course, the effect of subsidies has been completely negated.

Market reacts oppositely to expectations

"If you paid €200 more per square meter than you would before subsidies, and through state incentives received €12,000, you ended up in the red and the whole story doesn't hold water," said Boro Vujović, deputy head of the Real Estate Business Association, who had previously warned that the market had reacted differently to subsidies than was intended and expected.

"As an association and profession, we have been warning for years, and currently, that the market has slowed down. People are waiting because they don't know what will happen. The market stagnation is hurting us. Statistics for last year show that the number of transactions in Zagreb was 30% lower than in 2016. This is a direct consequence of subsidized loans," Vujović told the Croatian Radio in June of this year.

"A large number of buyers decided to wait after subsidized loans were announced for spring last year. They were postponed for summer, and finally implemented only in autumn. In the end, there were only two months left to implement everything. You cannot compensate for half a year or nine months in two months. A decrease in activity and a smaller number of transactions are already noticeable compared to usual for this time of year. As last year, we expect a surge in August, September, and October," Vujović warned then.

At the time, he also pointed out that subsidized loans in 2017 had directly triggered a price increase. "By the end of 2016, we had exempted from property transfer tax for the purchase of the first property. This was a permanent measure and was unrestricted in any way. Whoever met the conditions was exempted from tax. This was a stable, long-term measure that was good for the market. Instead of it, a measure was introduced to further subsidize banks, encourage consumer debt. Funds were limited, as were the number of loans," Vujović said.

APN still expects two thousand applications

Now, he warns that the short application period (two weeks) does not favor consumers, as it limits their negotiating space for the price. It forces them to conclude the transaction within a certain time frame, and sellers know this and take advantage of it during negotiations.

Vujović also warns that due to the condition that the user permit must be approved for subsidized loan approval, there are not enough apartments on the market that are suitable for subsidized transactions.

Last year, most incentives were implemented in the largest cities, Split and Zagreb. This year, the size of the incentive depends on the region in which the property is located. However, it seems that people in less developed regions cannot afford to buy a property even with the subsidy, which once again raises questions about the effectiveness of the measure.

Jutarnji list also warns about consultants who offer "operational-technical assistance" and "match" property buyers with "the best bank offers". We can hear from consultants that subsidized loans "are most profitable for buyers in less developed areas, with shorter loan periods and maximum use of the subsidy duration". They are, of course, basically telling us the same thing we know ourselves. However, it seems that they too have work to do, regardless of the weaker interest in subsidies compared to last year.

However, APN believes that it will still receive around two thousand applications, despite the slower pace.

"From the start of summer, we have been communicating that it is guaranteed that there will be enough funds, and citizens know that the tender will be open for at least two weeks and that all those who submit valid documentation within that period will receive subsidies. Therefore, we did not expect congestion, although we certainly expect at least 2000 applications," the Agency replied.

They add that the Law was changed precisely to ensure that the measure is not one-time, but that subsidies will be available annually until 2020. "This will certainly allow for better planning," the Agency is convinced.

source: tockanai.hr

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