For many, having their own apartment is an unfulfilled dream. Considering the trend of rising housing prices, it's even harder to achieve. Why are prices increasing, is a "housing bubble" being created and what actual impact does the state's subsidized mortgage lending on the real estate market have. In the Daily Topic, deputy president of the Croatian Real Estate Association at the Croatian Chamber of Commerce, Boro Vujović and president of the Developers' Association at the Croatian Employers' Association, Denis Ćupić, discussed this issue. Vujović emphasized that the price of apartments depends on the offer and demand, and from 2017, prices of apartments have been rising. Ćupić pointed out that there practically aren't any quality apartments on the market because they are sold before they're built. – Croatian citizens are accustomed to owning their homes; they don't want to live in rented apartments. One of the reasons is also that people were able to buy social apartments under very favorable conditions, he said. Vujović believes that apartment prices in Croatia are at the European average and that the situation is much different from the one before the crisis. – People were borrowing, the Swiss franc was playing a huge role, and there was unemployment. Nowadays, buyers are more cautious; there's no unemployment and no Swiss franc problems, he said, adding that there's a lot of construction underway, and that's how the market corrects prices. Ćupić emphasized that the cost of capital in Croatia is high, the VAT for apartments is high, the communal fee per square meter is 250 to 280 kunas, and all this results in higher basic parameters in the apartment price. – Slovenia has a VAT on apartments up to 9 percent. There is an initiative by the Croatian Employers' Association to introduce a similar model in Croatia, he noted. Vujović said that the state's subsidized first-time homebuyer program has introduced chaos to the market because it's time-limited. – The idea is good, but if it were to last a whole year, it would be exceptional. We have limited funds. In the 8th month, there's a huge demand, but there aren't enough apartments, and prices rise. The other thing is that we're giving money to people who are creditworthy. I think the money could be distributed in a different way, he said. Ćupić said that the incentives are affecting the market imbalance. – We should be developing the market for rented apartments and as a state, we should be encouraging investments in rental apartments. Our state still hasn't recognized this as a measure, he concluded.

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