Sale of apartments in Croatia is almost completely stopped. Last three years the market has fallen by over 30 percent and in some locations over 50 percent. Who’s to blame?
Professor Josip Tica from the Zagreb Faculty of Economics believes that builders who stubbornly hold prices and thus maintain the status quo are most responsible, which will not suit anyone in the end. He believes investors should be reconciled with a certain loss of profits, sell out homes and move into new investments. Otherwise there could be a new escalation of the crisis, which this time woul influence the employment and cause a large loss of jobs in the construction sector. Increase in unemployment would sooner or later impact related activities.
The consequence of lower sales of housing affects the rest of the economy, thus the banks changed their policy of financing, and the role of government has changed, because the focus is not to encourage new construction, but the real estate market itself.
Also, Professor Tica said that the problem of taxation is also important, namely lack of same when it comes to real estate. People are simply accustomed to having a real estate as one form of savings. When a tax-free part of the household would be established, and everything else taxed, then savings would be redirected to other parts of the economy and obtained tax could be invested in other areas, such as health or education.
All this would ultimately strengthen the economy, and thus indirectly the real estate market, that is encourage new projects.