Property Investment Croatia | What’s with the government loans?

Posted on July 29, 2012

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A lot of questions arose since government announcements about encouraging the purchase of housing loans with 200 euros per square meter. It is only the average loan amount and each amount in the end will depend on the size of the apartment, while the maximum price for the square meter will be 1600 euros. In this way the State is trying to encourage the reduction of prices, which are unrealistically high according to some experts. The largest amount will be given to the price of 1,200 euros, a whole 300 euros, while for 1,500 the buyer will get only 100 euros. Loan period is 20 years and interest rates should be within the existing POS system, which is 4-5 percent, although the Government is looking for ways to make the amount even more reduced. Except for the fact this is the way to encourage trade, the aim is to inspire new building and stop layoffs. There are many arguments that support the government’s plans, but there are also those who say that it is an inefficient and an interim measure. All generally agree that in the beginning they will be able to sell a certain number of apartments, but also argue that for a more significant shift a lot of decisive action is required, especially regarding the great benefits that need to be payed to the state and local government, of which the largest contribution is the communal cost. The problem could also be that this measure favors small investors who have built flats in cheaper locations, where the land is purchased by a lower price, and to them it is not much of a problem to drop the price. In any event, the fact is that the announcement of these measures has now only even more slowed the real estate market in Croatia, because everybody is hoping for a loan and wait with the purchase of an apartment. This is not good neither for merchants or constructors, which could decide for new investments for now is the most favorable moment due to reduced prices of land and construction materials. In any case, the value of unsold apartments in Croatia is estimated at 8 billion kuna, which is an amount that would much contribute to recovery of the entire economy.

via Property Investment Croatia | TRASA Real Estate Croatia – Part 3.

Posted in: Croatia