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Post by Mirko on May 6, 2007 21:49:19 GMT 1
Spanish property market is expected to collapse soon, and half a million Brits have property there.
Are the Croatian property prices going to go down in the near future? IMO CRO properties are overvalued.
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Post by mambo on May 7, 2007 3:07:28 GMT 1
In Croatia they are long past the point where the market should collapse. Spain is now at 6 % for the cost of the house (per year) while the income through rent is at a meager 3 %.
Croatia is about the same, so should not take long before the market will collapse here as well. 3000 euro for a square meter, for a view on a parking lot, is a completely insane price, but some idiots still think 'it is the right price'.
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Post by Carol on May 7, 2007 7:57:41 GMT 1
Spain and Croatia are completely different markets. Spain could be described as extremely high % of foreign owners with an enormous number of expats. Most of the property owned by foreigners is new built and although comsumption is high, it cannot keep up with the number of new developments that have been appearing on the market, rising year on year. Croatia has relatively few new developments thanks to the governments policy of limiting this and of course the blinding bureaucracy. It has low numbers of foreign owners who have no Croatian connection - many more than 10 years ago but still low on an absolute or % level. There are very few ex-pats. Another difference... Spain has monetary union with the rest of europe via the euro. Croatia is not even in the EU and it has the kuna. This means that the Spanish government cannot set its own interest rates or devalue its currency when the need arises. Instead Spain has had interest rates for last few years which have been set much to low for Spain's needs as the level relates to the needs of the German economy not Spain. So with low interest rates property has boomed. Now the rates have been raised and the Spanish economy is hurting because it has been riding high on inflated property prices. None of this describes the situation in Croatia. Its just totaly different. As far as I can see, investor / holiday home buyer confidence may well be hit by what has happened in Spain and that will have an impact on Croatia as well as everywhere else. The other thing to remember is that sellers have to be aware of the international situation and be willing to accept a lower price for there to be a property crash. For anyone who knows Croatia, does that sound like a profile of the current owners of Croatian property?
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Post by mambo on May 7, 2007 10:42:31 GMT 1
Carol,
Haven't been in Istria lately I understand ?
There is a huge amount of newly constructed apartments/houses, loans are very easy to get for locals (therefore enabling them to build), almost all of the new real estate is foreign owned, so basically an identical situation as in Spain.
What is however more important is the difference between cost and return on investment. With the current laws on renting property (via a company etc) and the extremely short season the return on investment is very low. The cost are however quite high and needless to say that most property does not have any return, it simply costs more money each year. Most of all, with the high prices of the apartments/houses an additinal rise of the value of the property is almost none existent. What now costs 2500 to 3000 euro/m2 is still going to cost 2500 to 3000 euro/m2 a few years from now, it is not going to be an endless rise of the prices.
Prices therefore will come down and in some cases it is going to be a drastic reduction of the price. We now see in Istria that apartments with a price tag of 1250 euro/m2 are being sold rapidly, whereas apartments with a price tag of 2500 to 3000 euro/m2 remain unsold. Here in the center of Porec two new apartment projects, with over 100 apartments, are being build with a price tag starting at 3000 euro/m2. One building has been almost empty (except for 2 or 3 offices) for 1,5 years and the other cannot find any interested buyers. The moment people hear the price and see what they get they run away. And these buildings are not the only buildings like this here in Istria.
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Post by Carol on May 7, 2007 12:33:08 GMT 1
Mambo.. you are correct i haven't been to Istria for a long time. My comments were based on Dalmatia. Mind you i am surprised to hear that there has been development on a spanish scale up there! What about the GUP?
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Post by mambo on May 8, 2007 3:17:27 GMT 1
Well, in Spain they build them 14 stories high, luckily they don't do that here.
But the new apartment buildings are simply rising up almost everywhere, seems that everybody has the idea that the sky is the limit. A lot of them will be in for a very 'cold' surprise when their property does not sell.
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Post by Mirko on May 9, 2007 10:50:26 GMT 1
I just read a newspaper report that some expensive new apartments are not selling well in Zagreb, Maybe prices will go down.
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Post by capio on May 9, 2007 11:28:21 GMT 1
People always speculate about price falls and 90% of the time they're incorrect.
Personally I doubt prices in Zagreb will fall.
Zagreb has more supply than demand, as most people own property, so logically prices will fall, but the number one role in Zagreb is, whatever is logical the opposite will happen.
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Post by Carol on May 9, 2007 14:04:15 GMT 1
plus you do need sellers who are willing to lower their prices. Are there many such people in Croatia, do you think?
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Post by happy on May 9, 2007 16:13:12 GMT 1
Can't see anyone lowering their prices.
Worry to much about what the neighbors think.
It's a case of cutting one's nose to ..................
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Post by mambo on May 10, 2007 2:12:55 GMT 1
In Zagreb I don't expect prices to drop, the city is too busy and there will always be new buyers, it is the economic heart of the country.
On the coast it is a different thing. There is nothing to do here other than a few months of tourism, not exactly a basis for a robust local housing market. In fact, the locals cannot even afford the houses anymore, so count them out. The only thing that is driving the market at the moment are the foreigners and the locals who want to sell to foreigners.
It then all becomes a very simple mathematical equation. If the current owner (local) can afford to pay the mortgage etc the price will not go down. If the local has to pay a mortgage or has a special loan from the bank which requires him to sell within two years after the property was finished, it becomes a different story. If he cannot sell within that period the bank will take the house back and sell it for a lower price.
If people need to sell they will accept lower prices if they are clever.............if not, they will lose the house.
When doesn't the owner sell his house ?
If the price is too high and nobody is willing to pay that price. It will take a few years for the owner to figure it out, but eventually he will get there.
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Post by irac on May 11, 2007 5:39:17 GMT 1
In Sibenik apartments (former govt ones) which were sold to the "renter" were sold on to (mainly) locals for c. €450-700 per m2 from 1999 to 2003, yesterday there was one, 64m2 2-bed near Subicevac - overlooking the sports ground - going for €150,000, 3 times the previous top limit. But this rise is more to do with greed, stupidity and misinformation on behalf of the owner than any market influence. Which seems to b more and more widespread while local Opcine aren't pushed by Zagreb to release govt estimates!
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Post by rijekafan on May 19, 2007 14:35:12 GMT 1
I have found Rijeka to have a terrific rental market. Yields there are still good. In general Rijeka is very strong market with very little foreign residential ownership. Net yields of 5 % are easily achievable.
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Post by dravlic on May 26, 2007 21:21:13 GMT 1
In Zagreb property will 100% drop !!! It happens even now...
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Post by irac on May 27, 2007 9:16:13 GMT 1
That sounds very interesting, where is it dropping and how? I know in Dubrovnik the market is overloaded and there is a drop in tourism due to poor services and facilities, same with parts of Istria and the Dalmatian coast, but Zagreb.....have pricesgone down or just lack of property to sell? In Zagreb property will 100% drop !!! It happens even now...
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