Hrvatska public gets first detailed insight into property market situation and trends. The word is about the annual publication 'Review of the property market in the Republic of Croatia', made by the Economic Institute in Zagreb in collaboration with the Ministry of Construction and Spatial Planning.

Using data from purchase-sale transactions reported in the Tax Authority, professionals of the Economic Institute of Zagreb, analyzed average prices, size, and age of different types of properties - apartments and houses, family houses, business properties, construction, agricultural and forest land in the period from 2012 to 2017.

For each listed type of property and each indicator, data are presented at the national level, at the level of counties and local units, and at the level of cadastral municipalities of the City of Zagreb. The publication is intended for a broad range of users.

It's the result of the 'Law on the Assessment of Property Values' adopted in 2015 and this review of the market has a few roles. On one hand, it's primarily intended for 'valuers' who work on property valuations, either for legal or business procedures, and then is designed for 'brokers' (real estate agencies) and all those who in any way deal with property trading. Finally, the publication will serve citizens,' emphasizes Željko Uhlir, state secretary at the Ministry of Construction.

Since this is the first such document, it covers a longer period, and in the future, it will be worked on a yearly basis. The goal is to get a transparent overview of the property market in order to avoid 'market bubbles' and crises they can cause. The research shows that, during the observed six-year period, a total of 536,811 transactions were realized on the Croatian property market.

Interestingly, the largest number of sales was realized with agricultural land, a total of 220,459, followed by 'apartments and houses' which achieved a total of 103,193 transactions and 'construction land' with 74,378 transactions. The total value of transactions in 2012 was 22.4 billion kuna, while in 2017 it rose to 27.8 billion kuna.

The most significant share in the value of transactions on the property market is apartments, which account for 35.4% of the value of transactions.

When it comes to the movement of sales prices, Maruška Vizek, one of the authors of the study, points out that trends are closely related to the business cycle. Thus, the average value (median) of apartment prices fell until 2015, when it was 7,858 kuna per square meter. After, it rebounded, to reach 8,310 kuna per square meter in 2017, which is still below the level of 2012, by 343 kuna.

However, when analyzed, trends at the level of local units reveal the entire heterogeneity of the Croatian space and local economic development.

'Data to be available in the Property Market Review clearly and very visually indicate that rural-continental parts of the country are dying both demographically and economically, while life and economic activity flourish on the property market in Zagreb, in major continental cities, and especially in coastal counties and local self-government units,' clarifies Vizek.

Indicators of property prices per local units show that tourism is the factor that most significantly affects the formation of prices.

On this, the price data of apartments and houses show that, among the seven counties with the highest prices, there are even the islands of the coast.

The distribution of prices on the Croatian property market contains a significant number of extreme values. For an objective representation, the authors of the publication used the median (median) instead of arithmetic mean, which is much more sensitive to extreme values of data.

'Median is the least sensitive to the presence of extremely high and low sales prices, therefore, in the case of property sales prices, it represents a much more objective measure of average property sales prices than the arithmetic mean,' explains Vizek.

Sources: EIZ and Ministry of Construction / Author: Neven Bučević/tportal.hr

A similar case occurs when calculating 'average wages', where the median wage represents a much more realistic measure of the average wage because extreme high wages that a small proportion of employees receive do not affect it. The publication, which brings significant progress in the transparency of the property market, will be presented to the public at the beginning of next week, and the Ministry of Construction is also announcing the creation of an instrument that will facilitate citizens' assessment of the value of their properties.

'The next step is the creation of a methodology for mass property valuation. When we choose the methodology, we will create web calculators through which each citizen will be able to get a quick estimate of how much their property is worth,' reveals Uhlir, emphasizing that it's necessary to further complete and refine the data for the creation of such an instrument.

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