Real estate prices are falling in 2024 - truth or myth?

The new year is upon us, which means one thing for us in the world of real estate: questions about what real estate prices will be like in 2024. Will it crash and when? What will the prices of construction land be? Will it be profitable to build a house? And what about apartments?

When we look at the multitude of articles on the Internet dealing with this topic, we can conclude that it’s no surprise that confused customers turn to us. Some claim that prices will rise, others that they will fall. Some talk about Slavonia, others about Zagreb, or Dalmatia. Some write about new constructions, others write in general. And how to capture information in this whirlwind of everything and anything?

And that is exactly why we decided to write this article, which will hopefully clarify any doubts you may have.

What was the situation in 2023?
Before we start with any forecasts for next year, it is necessary to look back at this year.

Headlines like "Croatia is the record holder for real estate price growth" filled the front pages of newspapers and portals when Eurostat's research revealed that, indeed, Croatia leads Europe in terms of real estate price growth. The second quarter of this year was marked by growth of as much as 3.5%, and the reasons for this can be found in several factors:

  • APN measure
  • Relatively low home loan rates
  • Entry into Schengen and the Eurozone, which made real estate more accessible to foreigners
  • Increased income from tourism

But what is crucial to highlight here is something else: that there was a drop in transactions. In other words, real estate is getting more expensive, and fewer are being bought. At least as far as locals are concerned - out of 35,000 transactions, as many as 13,000 of them were made by foreigners. So, despite the factors behind the price increase, we are buying less and less for the simple reason that we can no longer afford real estate.

Let's also mention that the APN measure has ended. That it will no longer be so profitable to invest in real estate because savings rates have increased and the state has also introduced national bonds. The difference between the asking price and the final price is on average 15% (which means that the properties are far overpriced).

And finally, let's add to that the fact that in the West, that is, in those European countries on which we rely financially and economically (for example, Germany), the construction sector has been stagnating for several years due to rising interest rates. Real estate construction dropped, and their sales also dropped. And this negative trend continues.

Does this mean that it is Croatia's turn?

Falling real estate prices - is it possible?

If you explore the depths of the Internet in a little more detail, you will see that every year in December, articles are written that "guarantee" a fall in real estate prices in the coming year. And as the saying goes, even a poor hen pecks a grain, so one time she will be right.

What we can say with certainty is that the trend from the West will continue in Croatia. This is already visible in the decrease in the number of transactions, which normally results in a decrease in real estate prices. However, we must also keep in mind that this causal effect takes time, at least six months. Now, if the economic laws are maintained this time, at the beginning of 2024, at least stagnation in the growth of real estate prices, and later their decline, should be visible.

However, Croatia has one specialty. This is a very touristic country.

People may not buy apartments and houses because they will be too expensive, but they will always have money for summer vacations. And it will always be profitable to buy apartments or cottages by the sea.

What will be the price of real estate in Istria?

Perhaps the most interesting region for us in terms of real estate prices in Croatia is Istria. A beautiful coast, rich culture and history, a handful of tourist attractions - it's no surprise that this is one of the most interesting touristic parts of Croatia, which every year attracts the most visitors from foreign countries such as Germany and Austria.

Thanks to this, the real estate market in Istria is specific and can differ greatly from other parts of Croatia. What exactly does that mean? We will explain with a few examples.

First of all, agencies like ours know one golden rule: if the location is good, the price will be good. It doesn't matter if it's land, a cottage, an apartment - if it's by the sea, the price will be high because the demand will be huge.

And one of the main "problems" with real estate in Istria is that there are not enough of them. Istria attracts a large number of foreign and domestic real estate investors, and there are also locals looking for their own home. So, everyone would live in Istria, but there is not enough real estate for all that demand!

On top of all that, thanks to its tourist attraction and Mediterranean climate, the majority of real estate buyers in Istria are retired or near-retired foreigners. They have sold their homes in Western Europe and have larger sums at their disposal when buying real estate in Croatia, which is cheaper than in the West. And it is precisely this ratio, in which the sales price in other countries is higher than the one in our local market, that maintains the relative stability of prices.


So, from all of the above, we can conclude that real estate prices in Istria will have a hard time droppingg. We believe that it will stagnate, due to the general situation on the market, but since there will always be demand, prices will not change significantly.

As far as the real estate market is concerned, this is a positive thing. But as far as the locals are concerned, it certainly has a negative impact on the standard of living - in other words, local residents can no longer afford real estate. What does this mean for this region and what are the potential consequences of such a real estate market? We will deal with it in another article because it is a rather broad topic. :)

And what about the rest of Croatia?

Apart from the coast, another very popular point for real estate in the Republic of Croatia is Zagreb. Prices are skyrocketing, there is no real estate, new buildings are sold out even before construction has begun. However, after the earthquakes that hit the capital, we notice a drop in demand for "older" buildings and houses and an increase in demand for new construction.

And this is not only true in Zagreb.

Any real estate agent you ask will tell you that new construction will always sell. If we add to that the fact that a decline in the number of newly built buildings is predicted (under the influence of tendencies from the West), we can conclude that there will be demand and no supply, so prices will definitely be high. And so throughout Croatia.

The things we discussed here stem from our experience, but also from verified economic tendencies. And will Croatia surprise us once again and defy all real estate laws - that remains to be seen! ☺

 

There, we hope we were clear enough. But if you still have any doubts after reading this article - contact us and we will be happy to help you. ☺