Boom in Construction

The boom in construction in Zagreb, not seen since 2008, can be seen in the latest data from the Croatian Bureau of Statistics, which shows that the average price of a square meter of a new apartment in Zagreb is 12,390 kuna, which is 24.8% more than a year ago. 674 apartments were sold in new constructions in Zagreb alone in the second half of last year. According to unofficial estimates, approximately 1,000 apartments were sold in new constructions in Zagreb over the past year. The average price of a square meter of a new apartment in the second half of 2017 in Croatia was 11,060 kuna, which is 11.7% more than in the same period a year earlier, according to DSZ data. However, the average price of a square meter of a new apartment in Zagreb increased by 24.8% more than a year ago, while in other settlements this price is 9,838 kuna, which is actually 0.2% less.

1,330 new apartments

DSZ data also show that in the second half of 2017, 1,330 new apartments were sold in Croatia, of which 647 in Zagreb and 683 in other settlements. Recently, Jutarnji list wrote about how most apartments in new constructions in Zagreb are sold before the buildings are completed, and some even at the beginning of construction. Decades of residential buildings are being built, intended for various categories of buyers, and in almost all of the more quality buildings in good locations in the city, all or most of the apartments are sold-out. There are several reasons for this boom in construction, the rise in prices and demand. Most traders agree that this is a result of accumulated demand, as after the crisis in construction, there was a certain stagnation in construction and a shortage of new apartments. - However much the crisis was, there is always a certain number of people in cities like Zagreb who want to buy a new apartment. Some have been looking for new apartments for four years. However, this boom in demand could be a bubble, the result of accumulated demand, and the question is what will happen in 2020? Will demand fall? Asked Patrick Franolić, director of the company Spiller Farmer, a consulting agency for real estate business. Dubravko Ranilović, director of the Kastel real estate agency and president of the Association of Real Estate Business, warns that the quality of the apartments in new constructions has changed somewhat compared to the previous ones, which also increased the price, and that the buildings are also being built on more attractive locations than before, which also sets the price.

Buyers still available

- Part of the new construction in Zagreb has already been A-grade for some time, and some even A-plus. Therefore, the question remains whether the price increase is for the same apartment. Also, regardless of the increase in sales, we are talking about a smaller number of people in Croatia who are buyers, and for this growth to be maintained, the economy must follow it, emphasized Dubravko Ranilović. Some builders told us yesterday that they have had certain pre-payments for apartments due to a new law on lending, but that there are still buyers. Good credit conditions were also one of the reasons for the good demand for new constructions last year, and it prompted the rise of the price of a square.

Factors that led to the rise in prices

Borislav Vujović, deputy president of the Association of Real Estate Business at HGK, explains why house prices are on the rise. - There are more factors that influence it: economic growth, housing loans with low interest rates, low interest rates on savings, geopolitical situation, but also the shortage of new construction. The interest of residents in attractive locations that are being converted into apartments for short-term rentals is also a significant factor, as well as the low prices of real estate compared to Western Europe. What doesn't go in its favor are emigration and the new Ovršni Zakon - lists Vujović, who as the most important factor that directly affected the rise in real estate prices, singles out the APN- subsidized loans. A similar thing can be heard from real estate agencies themselves, such as Antonija Mikšić from Opereta, a licensed real estate agent, who emphasizes that the conditions for lending have been tightened from this year, and many people who were able to take out loans in the past are now unable to do so or can take out a loan of a significantly lower amount.

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