Property in Croatia and the Economy

The property market in Croatia is in its infancy – Croatia has yet to achieve EU membership and there are still hurdles that would-be foreign buyers have to jump over in order to secure a house purchase in Croatia.  What all this means is that it is still very much an immature market where risk takers buy-in and the cautious just holiday!

But if you’re looking for a bargain with a long term potential for strong yet sustainable growth, Croatia could very well be it.  In this article we’ll take a look at property in Croatia and the economy in Croatia as well as the efforts the nation is making towards EU and NATO membership.

Depending on what you read, all in the garden of Croatia’s housing market is either healthy or decidedly unhealthy!  The truth probably lies somewhere in the middle – on the one hand you have the second home market into which brave Brits, Irish and German investors are buying quite happily and fuelling fairly strong house price growth along the southern coastline, on some of the islands and now in Istria too.  And then on the other hand you have reports that three out of four households in Croatia have financial difficulties and that inflation has run away with the average wage leaving most people struggling fiscally to survive.

So what’s happening in Croatia?  Well, it’s on its tenth government since independence and it is failing to achieve the targets set for it by the European Union to achieve accession.  There was talk a few years ago that Croatia would join in 2008 – or 2009 at the very latest.  But the way things are going the nation will be lucky if it is allowed into the club by 2010.  Part of the problem is Croatia’s struggling against corruption and organised crime and part of the problem is the economy.

As mentioned, inflation growth has soared ahead of GDP with inflation running at about 5.7% and GDP growth actually expected to decline this year from 5.3% to 4.4% according to the Croatian Economic Outlook Quarterly.  The situation is so dire that national protests are expected in April, meanwhile the Croatian National Bank has announced that banks might increase their interest rates which would result in a worsening of the financial situation for those citizens who have loans, mortgages and credit cards.

So – fiscally speaking Croatia is not in a good place and to add to the problem the EU has blocked certain promised funding that was to assist the nation because it has criticised the way the state administration generally handles these funding opportunities.  Fortunately the new government has insisted it will do all it can to turn the economy around, achieve an invitation to join NATO in April and have everything in place by the end of the year to make the EU happy and for accession talks to proceed.

Meanwhile back to the property market. 

Naturally a nation in dire need of a fiscal overhaul will have a less than buoyant housing market right?  Well yes and no – it depends where you look!  If you look at the most popular holiday hotspots then you will witness international demand, strong house prices and a market where properties put up for sale do actually sell.  But step away from the tourism hotspots and the picture is very different.  If you want to speculate and you want to speculate with property in Croatia, now is a good time to negotiate hard, land or property bank and sit back and wait until Croatia sorts out all its domestic issues and manages EU accession.  Because there is no denying the allure and appeal of the nation, it won’t be long before prices rise in line with demand against a backdrop of an economically secure nation...just be prepared to be in it for the long haul.

Special Reports: Property News for Croatia

Croatia Investment Property Buying Process
Property investors interested in Croatia will be pleased to learn that the property purchase process is relatively straightforward

Croatia Property Buyer’s Guide
Why Croatia's emerging investment property market is growing in attraction for international real estate buyers.

Croatia Property Investment Overview
Croatia is re-emerging as a tourism hotspot and represents an excellent property investment opportunity for overseas real estate investors.