Stronger wave of price increases started in 2017, following the introduction of subsidies for housing loans.

In the period from 2010 to the second quarter of 2020, housing costs in the European Union increased by 14 percent, while house and apartment prices rose by 25 percent. Housing assets became more expensive in 23 EU member states, while their prices fell in four countries, with the price of a square meter of housing area doubling in Estonia (+100%), 86% increase was recorded in Luxembourg, while in Latvia and Austria it was slightly below 80 percent. Decreases were recorded in Greece (-31%), Italy (-13%), Spain (around 5%) and Cyprus (-3%).

Jump in the last five years

Our housing assets are currently 50 percent more expensive than they were at the beginning of 2010, although it's worth noting that the rise began in the last five years. Analyst from the Croatian National Bank, Davor Kunovac, points out that housing prices in Croatia started rising again after a several-year decline in 2015, and by the second quarter of 2020, they had risen by about 29 percent compared to 2015. At the same time, prices in Zagreb rose by 42 percent, on the Adriatic by 26 percent, while in other parts of Croatia the price of a square meter of housing area increased by 13 percent.

The price boom has not been halted by the pandemic and quarantine, and Croatia has recorded a significant year-on-year increase in housing prices in the second quarter (8 percent), which is higher than the EU27 average.

Among transition countries, Hungarians are an exception with a decrease in prices (around 6%), while prices of housing assets in other countries are rising even further, in the Czech Republic similar to ours, in Slovakia by 10 percent, and in Poland almost 11 percent.

A stronger wave of price increases in Croatia has started after the introduction of subsidies for housing loans since 2017. Between 2017 and the end of 2019, the state subsidized loans for over 9,400 families, but this year it could come to an additional 5,000 customers. This year, state subsidies have been approved in two rounds. In March, over 3,700 citizens applied for subsidies, and in September over 2,700.

Researchers Davor Kunovac from the Croatian National Bank and Ivan Žilić from the Economic Institute are expected to publish a paper today, in which they tried to determine, based on data on transactions from the Tax Administration, in which measures state subsidies had an impact on housing prices. The researchers believe that the rise in housing prices in Croatia is not a local specificity, but rather largely a part of a common European cycle of rising housing prices.

"Synchronized movement of housing prices among countries may be a result of similar macroeconomic movements, financing conditions and so on," Kunovac explains. "For example, recent Eurostat statistics illustrate how housing prices in the European Union have risen on average by about 24 percent over the same period, less than the 29 percent in Croatia."

However, the study's results suggest that in 2017, at the time of the introduction of the first APN program, Croatia experienced a further acceleration of the rise in housing prices compared to the common movements in the European Union.

Prices rising during the coronacrisis

"My very rough estimate, based on the calculations from our analysis, is that about a quarter of the growth in housing prices in the period after the introduction of subsidies can be attributed to "domestic factors" of growth, which we suggest in the paper matches the introduction of subsidies," Kunovac explains. Housing prices rose by about 16 percent from 2017 to 2019, while according to that estimate, subsidies raised them by about four percentage points.

"The growth that preceded that period is clearly unrelated to subsidies. Overall, it appears that subsidies have had an effect on increasing housing prices, but it was not dominant," Kunovac says.

Statistical Office points out that in comparison to the first quarter of the year (the quarantine began in the second half of March), new housing assets had prices of 3.4 percent more from the beginning of April to the end of June, while prices of existing housing assets recorded a rise of 1.6 percent. However, that rise was milder than before, and in Zagreb, a slowdown in growth was recorded at the year's level, from 12.6 percent to 8.7 percent, while in the Adriatic, a gradual acceleration was recorded, with a 5.9 percent year-on-year increase (5.7 percent in the first quarter). In other parts of Croatia, a historic year-on-year increase of 13.4 percent was recorded.

The advertiser Njuškalo recorded over 13 thousand ads for long-term renting, and the average monthly rent of a 62-square-meter apartment in the city of Zagreb in September was €568, which is about 12 percent cheaper than in September 2019.

Source: vecerji.hr

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