Buyers and sellers of real estate in Croatia often ask us for advice and information on the prices of houses, apartments and land . They are often interested in whether Croatia real estate prices will fall or rise. The fact is that residential real estate prices in Croatia have risen in recent years, in some parts of Croatia, even in double digits compared to the previous year.
There is no indication of a drop in prices for now, and it will most likely remain so. Demand is very high,both domestic and foreign buyers want to buy real estate. Houses and flats are also in demand, mostly in new construction, and building land in good locations has really become a rarity.
Statistics show that housing prices in Croatia at the end of 2021 were 9.1% higher than in the same period last year (comparison of the last quarter of 2020 and 2021). At the same time, prices of new construction increased by as much as 15%, and existing real estate by 8.4%. As Croatia is very geographically different and not all parts of Croatia are equally popular with real estate buyers, it is worth comparing the prices of residential real estate on the sea, the city of Zagreb as the capital and the rest of Croatia.
There are larger differences in price movements. Thus, prices on the Adriatic increased by as much as 11.7% in one year, in the city of Zagreb by 8.8%, while in other areas 4.1%. Indices of changes in residential real estate prices over the years in Croatia can be viewed in the online document of the Central Bureau of Statistics.

Why are real estate prices in Croatia rising?

Demand for real estate in Croatia is high, and when demand is high, prices rise. Newly built apartments in large cities and on the Croatian coast often sell out before they are built. In the absence of newer construction and existing, older real estate has become interesting to buyers. This has also led to a general rise in prices.
Building land in attractive locations in popular parts of big cities, as well as those in cities close to the sea and with a sea view, were sold at record prices last year. There are fewer and fewer good locations and as a result, prices are rising. Therefore, it can be concluded that the demand for real estate in Croatia is currently higher than the supply. And what are the reasons?

1. BUYING REAL ESTATE IN CROATIA IS A SAFE INVESTMENT

As a result of the savings of citizens in the era of the pandemic and low-interest rates, money is available to a large number of people or at least easily accessible. If we take into account the low-interest rates on savings in banks, it is logical that people want to invest their money and achieve added value. Real estate is traditionally the most popular investment choice for most people, as an alternative to keeping money in a bank or risky investing in stocks, funds or cryptocurrencies.
Thus, buying real estate imposes itself as a fairly safe choice. Real estate buyers in Croatia very often buy real estate as an investment, regardless of what they initially plan to do with it, live, use it as a holiday property or put it in the function of year-round or tourist rental. While domestic buyers buy most real estate for housing or rent, foreign buyers (who buy real estate mostly on the Croatian coast) buy for their own vacation or as an investment for tourist rent.
Regardless of whether the owner of the property decides to use it for his own use or decides to exploit it in some way in order to return the investment, the value of this property is quite certain and its price increases over the years. We wrote about the purchase of holiday real estate in our article Second home real estate market in Croatia during the pandemic .

2. CROATIA HAS EXCELLENT TRAFFIC CONNECTIONS WITH EUROPEAN UNION COUNTRIES

As many as a quarter of real estate buyers in Croatia are foreigners, most of whom are Germans, Slovenes and Austrians. If we take into account real estate in parts of Croatia that have access to the sea, the share of foreigners in the total number of real estate buyers in some places is even higher than 70%.
The most popular destinations for buying real estate, such as Istria, Kvarner, Crikvenica, the island of Krk, are only a few hour’s drive away from developed European countries. Quality roads leading to Croatia, in the vast majority of highways, make Croatia the perfect country for a long vacation, but also a great place to have a holiday home where you can spend the weekend and relax from the crowds of big cities.
With the development of Croatian airports and the constant introduction of new airlines from Germany, Austria, Switzerland, Sweden, and the Netherlands, Croatia is becoming an interesting air destination, not only for tourists but also for buyers of holiday properties. Thus, real estate in Croatia is bought not only by buyers who come by car, but also by those who come by plane.

3. CROATIA IS A SAFE COUNTRY

Today, security is one of the most important items when buying a property. We are not only talking about a safe buying and selling process, but also about the safety of the destination itself. Croatia is a country of the European Union, located in the Mediterranean, with an ideal climate and beautiful nature. At the same time, unlike some other Mediterranean countries, the crime rate is quite low and many destinations are still very "docile".
For example, on some Croatian islands, but also in cities, people still sleep with their doors unlocked. In addition, Croatia has not significantly felt the migration crisis, which real estate buyers from Germany and Austria often show us as one of the reasons why they decide to buy real estate in our country.

4. PURCHASE OF REAL ESTATE IN CROATIA AND RETURN ON INVESTMENT

Real estate buyers in Croatia often decide to buy real estate in order to benefit financially from it. Here, we primarily mean that buyers put real estate in the function of long-term or tourist-seasonal rent.
In large cities, such as Zagreb and Rijeka, buyers, in addition to their own housing, often decide to buy for long-term rent to families, students or singles. Recently, there has been a trend of buying real estate in large cities for tourist rental, with particularly attractive locations in the central parts of cities.
As we mentioned earlier, Croatia is a very popular tourist country that hosts a large number of tourists from all over the world during the summer season (and more often throughout the year). A large part of the tourist offer consists of villas and holiday apartments. In the absence of quality hotel accommodation in most coastal destinations, there is a serious demand for villas and apartments of high-quality decoration, with swimming pools, but also privacy.
Buyers of our agency Euro Immobilien very often decide to rent their property, especially if they intend to use it for a short time and believe that it is a pity that the property is empty most of the year. In addition to having their own holiday property in Croatia, they also ensure the return on their investment, to the extent that depends on how long the property is rented, how it is arranged and what facilities it offers, and what rental prices it achieves.
As a rule, high-quality real estate, villas and apartments in good locations or those with sea views, provide a return on investment of 6-8% or a return in 12 to 15 years. So, to give them a property in a nice place, and at the same time return the investment, seems like a better idea than keeping money in the bank, right?
If we add that real estate in, today less and less, attractive locations, the price only grows over the years, buying real estate in Croatia seems to be an economically very justified decision.

Croatia real estate prices in the future

It is very ungrateful to predict price movements in Croatia, but all indicators suggest that price growth could continue. Although real estate prices in Croatia are to some extent affected (and will be affected in the future) by subsidized youth loan programs, potential growth in bank interest rates, availability of financing, inflation, and other economic impacts, the fact is that 48% of real estate in Croatia accumulated money saved.
From this, it can be concluded that prices will not depend crucially on the availability of financing and interest. A large share of real estate purchased in cash is bought by foreign buyers with foreign capital. For them, the prices of Croatian real estate are still relatively low compared to the real estate prices in their countries, and therefore their demand is not expected to fall. Taking all this into account, we at Euro Immobilien are of the opinion that prices will continue to rise, but possibly in a slightly lower percentage than in previous years.
Check our offer and Croatia real estate prices: Flats and apartments / Villas and houses .
If you want to know what is important to know before buying real estate in Croatia, be sure to read our article What is important to know before buying real estate in Croatia .