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Post by Carol on Mar 16, 2008 12:31:06 GMT 1
I've just seen your other answer on the global markets thread and I am not sure where to post this next post. As you have a City background, let me put it this way: under the efficient market hypothesis, the Dalmatian coast property market has the least efficient market I have ever seen, anywhere. It will only crash if Slobodna dalmaciji says its going to and says it a lot. However, Slobodna Dalmaciji is too busy writing stories which sell their newspapers and their general themes are: everyone loves Croatia, Croats are at the best at everything, the women are the best looking, their sports people are the best in the world and their cuisine is world class, Dalmatia is the most beautiful place in the world, the whole world is trying to buy up property on the coast and the EU is trying to get into Croatia so it can dominate the region and change the Croatian way of life. Given all that, it would be a big change of editorial policy if they started to write some properly researched, balanced stories too.
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Post by zorro on Mar 16, 2008 12:44:34 GMT 1
Isn't that what Dalmatians think in general?
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Post by rijekafan on Mar 17, 2008 4:48:03 GMT 1
I have been involved in this market for 5 years now and as usual what Carol says is true. The Dalmatians are a nightmare to deal with in business and I find rudeness there which rarely appears in the north. Sto juzni to tuzni ( The further south you go the sadder it gets) What I think has not been mentioned here is the effects of the global credit squeeze. The banks in HR are almost all foreign and they are finding it hard to raise loans and credit rationing wil affect Croatia. The foreigners who are buying will also be affected by credit issues. How much the credit squeeze will affect the market is an unknown but one would assume it would affect Croatia more than developed economies.
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Post by zorro on Mar 17, 2008 9:27:47 GMT 1
Of course never suffer a rude Croatian, more than you would anybody else. They know no better and are certainly nothing special.
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Post by shanejulie on Mar 17, 2008 10:10:47 GMT 1
Carol - All markets here, not just property, are not based on any form of what could be seen as normal business practices - I guess working in the City of London (ie the real world) is probably the worst training for a place like this!
I agree with Solitum - a land tax will sort the property market out here - as well as have many other benefits. In Australia you don't pay tax on your primary residency only on rentals or holiday houses.
As for Slobodna Dalmacija - it has just become a tabloid. But even us foreigners believe its lies - or the Croatian Tourism Board's (The Mediterranean as it Once Was Campaign)! We have all been seduced by this country's bling and its only when we try to work here that we find the reality. Croatians are not stupid - they only have to dangle a couple of old ruins and the promise of some type of 'real' life and we westerners all come running. Then they are happy to just bump their prices up. Tito taught them well how to milk outsiders for as much as possible.
They are not lazy either - who would try to setup a small business with the current bureaucracy - only crazy foreigners.
(I have to say Croatians are not lazy or stupid - I got my domovnica last year!)
Property will have to drop here - Croatians have got credit up to the eyeballs and if there is any drop in tourism they will be in trouble. The new cars, boats and clothes they have been buying won't generate much income.
Mambo - the collapse of life in Istrian towns (and on the Dalmatian Islands) is more due to the fact Croatians no longer want to live in small villages, tending olive groves and vineyards. Plus its too hard to have a small business there. The only thing keeping the towns from ruin are the foreigners buying the old houses and employing trademen. We are renovating in Motovun - there are only 350 permanent residents there now - any the number is falling. This is a generational issue and not just of recent times.
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Post by Carol on Mar 17, 2008 10:13:01 GMT 1
It is true that the credit crunch is the single largest factor dominating global property markets today. It would be foolish to say that Croatia won't be touched by it, but my personal opinion is that it will be relatively unhurt. There are two groups of buyers in Croatia: domestic buyers and foreigners. Domestic buyers are the larger group across the country, but particularly in the cities where people live and work (eg Zagreb and Split). Almost any domestic buyer who bought a property in the last few years will have got a kredit (as close as it gets to a mortgage in Croatia). Moreover there has been a personal credit explosion in Croatia over the last few years. So it would be foolish to say that the market will not be affected, but it would be worth pointing out that in more developed markets, almost everyone has a mortgage whereas in Croatia, many people own their homes outright. I don't have figures, this is just my general impression. My other thought is that the areas where Croats have been buying property using a Kredit is the cities. This is where the work is so there is an ongoing demand for property in these places.
With regard to the foreign buyers, they almost certainly do not have Croatian mortgages. Some (many) of them may have borrowed against their home to raise cash to buy in Croatia, but would people really put themselves in a position where after an interest rate rise, they can't afford the mortgage payments on their own home in order to have a second home in Croatia? It would seem an odd thing to do, but I admit that people do irrational things sometimes. however, even if these buyers did decide en masse to sell their property in Croatia for massively reduced prices, they are still in such a minority that I don't think it would precipitate a crash.
It is just my personal opinion but I really don't think the credit crunch will hit the Croatian property market with the sort of impact it would have on a more mature market like the ones in Germany and the UK.
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Post by shanejulie on Mar 17, 2008 10:21:43 GMT 1
I think Sanader and others want to blame it on foreign issues - but Croatia was heading for trouble due to domestic issues before the 'credit crunch'. Its no longer the latest hot tourism spot, there is no broad base economy to speak of, unemployment is high and personal credit has gone through the roof. Eventhough they own their houses they still have to put food on the table - and prices in the markets seem to have gone up about 20% just this year. Croatians have all tapped out their credit cards.
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IgorG
Full Member
Posts: 49
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Post by IgorG on Mar 17, 2008 11:49:41 GMT 1
Only good thing is that in Cro credits are hard to get, bank won't give you more than 75-80% of what you property is worth, only car and general credits can be given without any mortgage and this is only on 1/3 of monthly income, so we will see car and wages repossessions and only small amount of property will be repo.... I can tell you that in 5 years that we are working with banks, only 10 or so houses and flats were sold by banks, this is because banks don't want real estate, they will take your paycheck but will not touch property because is complicated... and it takes years of going to court, and then selling it on auctions..... in next year or two you will see smart sellers emerging more and more... about wealthy Russians, I sold them an apartment, and they really did not ask about price reduction.... but I always say I had that one Russian and there are no more
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