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Post by happy on Mar 6, 2008 19:02:57 GMT 1
It was reported recently that the average property in the UK now costs approximately 8 times the average income. (before someone shoot me down, the report never said what the AVERAGES were).
This situation is viewed as UNSUSTAINABLE and property prices are expected to crash in the UK!
Does anyone know what the property price/income ratio is in Croatia?
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Post by Carol on Mar 6, 2008 19:39:04 GMT 1
no but if you include the coastal properties, then it will be higher than the uK. I don't think it will be possible to calculate for croatia because you need 2 numbers: average income and average property price. Property price and asking price are not the same thing though one is a proxy for the other in the Uk. Even the government doesn't know the average income in croatia as the black economy is huge
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Post by darcy on Mar 6, 2008 23:25:55 GMT 1
Property prices in Croatia are driven by Croatians living abroad, planning to retire in Croatia, buying for a holiday or for the sentimental reasons. If I want to sell, they are my ideal buyers.
Prices in Croatia are not driven by Croatains working and living in Croatia. Keep in mind, Croatia is also very expensive country, so the costs of living are similar to ... whereever you come from. That is why they have corruption, organized criminal etc. (eg. Prime Minister's salary is not sufficient to meet his expectations, so ... just as police officers, attornies, doctors.).
Carol, is it too much to ask you for a profile of your buyers?
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Post by justapixel on Mar 6, 2008 23:50:04 GMT 1
I'd say an average price is around 100k€, which is around 15 average incomes. The cheapest apartment you can get in Zagreb is around 75k€, which is 11 average Zagreb incomes. Let me see, the apartment we're buying in Zagreb costs 10 (our) average incomes and it feels like a substantial financial burden. In Dubrovnik area that ratio is more like 40-50...
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Post by Carol on Mar 6, 2008 23:59:42 GMT 1
It is not too much to ask, its just that I can't give you an easy description. In 2006/early 2007 about half of the people who came to us were Croatians from Split looking for a flat.
For various reasons that market has dried up now and we are left with the other half of the business: the foreign buyers. We get people from Europe (west and east), the US, Australia, South Africa etc who want to spend anything from €80,000 to €mils. They want old stone houses, land, new build apartments, villas (not many for those!). I think we just get a cross section of the people who are buying in Croatia. Maybe we get a bigger % of the British market than some other agencies but there are not that many British buyers around so it doesn't feel like we are an agency serving the British market (or we'd go bust!).
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Post by justapixel on Mar 7, 2008 0:23:23 GMT 1
It is not too much to ask, its just that I can't give you an easy description. In 2006/early 2007 about half of the people who came to us were Croatians from Split looking for a flat. For various reasons that market has dried up now and we are left with the other half of the business: the foreign buyers. Does it mean your market has shrunk by half in a year? That's a very good sign of incoming property crash, or at least a correction. . |
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Post by zorro on Mar 7, 2008 1:36:19 GMT 1
I put my apartment on the market recently, and most people offered 10 000 euros less than the asking price. I knew of two other sellers of properties and they had a similar experience, and we all ended up taking the properties back off the market. Its just a buyers market now in my opinion.
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Post by Carol on Mar 7, 2008 9:56:56 GMT 1
it shrunk by 50% in terms of numbers of buyers but not in terms of revenue because the local buyers typically were looking in the €60k - €80k price range. We work on % commission, so the absolute of money we take on such transactions was not a huge part of our annual revenue.
They were good buyers though. They did not have unrealistic expectations, they needed to buy so they didn't waste time "just looking" and they required a lot less handholding.
Would agree 100% with 3 lions. It is a buyers market, but I'd add that its been that way for well over a year and the sellers are only beginning to get the faintest glimmer of it, such is their determination that property only goes up.
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Post by justapixel on Mar 7, 2008 10:17:15 GMT 1
it shrunk by 50% in terms of numbers of buyers but not in terms of revenue because the local buyers typically were looking in the €60k - €80k price range. We work on % commission, so the absolute of money we take on such transactions was not a huge part of our annual revenue. They were good buyers though. They did not have unrealistic expectations, they needed to buy so they didn't waste time "just looking" and they required a lot less handholding. I really cannot imagine what can be (or could be) bought for 60-80k in Split area where everything is much too overpriced. Would agree 100% with 3 lions. It is a buyers market, but I'd add that its been that way for well over a year and the sellers are only beginning to get the faintest glimmer of it, such is their determination that property only goes up. That's a useful information for me because I might have to mediate for my gf's parents who suddenly want to buy an apartment near Zagreb for babysitting. Basically that means we can bargain. . |
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Post by Carol on Mar 7, 2008 10:27:24 GMT 1
60 -80k would have bought a 45-60 m2 flat in Kastela. It still does sometimes, but rarely now and the ones with parking very close by have mostly gone as these were the ones which were most popular with the split overspill. Proximity to the sea was not so important to them, they just wnated to get to Split easily.
My comments relate to the coast. I'm afraid i know nothing about the Zagreb market.
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Post by justapixel on Mar 7, 2008 10:50:34 GMT 1
"Split overspill", that describes it well. ;D
Zagreb is a different market but I expect the situation to be similar. Sales are stagnating and buying power has suddenly dropped because of increased interest rate. There are no foreigners there, though, except for Dalmatians who have sold their 100yrs old ruin for a few hundreds and are now "buying an apartment for kids". €80-100k is a cutoff point above which an average Croatian (family) can't get a loan, and for that money you get a small studio.
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Post by mambo on Mar 7, 2008 12:10:15 GMT 1
The Zagreb market cannot be compared to the rest of Croatia. Zagreb is a busy city, has actually something to offer and most people are there, like in any other major city all over the world, for economic reasons.
The available space in Zagreb is limited, traffic is horrific and houses/apartments in the center will always remain wanted by buyers. I don't expect prices to drop quickly in Zagreb and don't forget, salaries in Zagreb are also higher compared to other regions.
The coast however is a completely different story.
It basically has nothing to offer, no economic activity (other than tourism in 75 % of the coast) and the bulk of the buyers are foreigners.
Foreigners have the strange habit of comparing the prices here with the prices they pay in their home country and more often than not they make the stupid mistake of saying 'oh, that is cheap, in xxxx we would have paid triple that price'. Most of the time they make these remarks when the seller is present. Americans and Brits are very good in these mistakes !
The result is obviously that Croatian sellers want the highest price possible, even though the real value of the house is perhaps 1/4 of that price. They simply reason that 'if there is one stupid foreigner who wants to pay that price, I am going to find him'.
They forget that the market then fully depends on the economy in other countries. When the economies are doing well and people have money to spend they will be more willing to pay a bit more for a house in a foreign country.
Nowadays, with the world economy tumbling in recession, credit crises everywhere (today the Carlisle group collapses, 21 billion euro down the drain), the dollar in a free fall, price of oil sky rocketing, we will see more and more foreigners tightening up their wallets. And when we then hear stories that the British real estate bubble is about to burst it becomes hopefully clear that the Croatian real estate market is also a bubble which is soon to burst.
Houses simply don't add value because you think that it should. When foreigners are the main buyers you cannot simply ignore what is going on in the world. Unfortunately Croatians DO simply ignore what is going on and one they it is going to bite them in the A.S.S.
Only the very rich will keep buying, but there are not too many of them.
I have said it many times before, here in Istria only the reasonable priced houses and apartments sell, all the heavily overpriced houses remain on the markets for many years. And to be honest, buying a ruin for 80,000 euro.........you must be a bit crazy, no matter how much you like the property !
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Post by Carol on Mar 7, 2008 12:25:00 GMT 1
Mambo, exactly how many sales of Croatian properties to Britons and Americans have you brokered that you feel experienced enough to make such statements?
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Post by justapixel on Mar 7, 2008 12:33:30 GMT 1
The coast however is a completely different story. It basically has nothing to offer, no economic activity (other than tourism in 75 % of the coast) and the bulk of the buyers are foreigners. That's valid for smaller coastal places, but for larger cities like Split, Rijeka, Zadar, Pula, locals seeking a place to live still form large majority. They forget that the market then fully depends on the economy in other countries. When the economies are doing well and people have money to spend they will be more willing to pay a bit more for a house in a foreign country. That's universal behavior. We can see it right now, for example in interplay of USA credit crisis and different world stock markets. And that makes tourist-dependent economies especially vulnerable. I have said it many times before, here in Istria only the reasonable priced houses and apartments sell, all the heavily overpriced houses remain on the markets for many years. And to be honest, buying a ruin for 80,000 euro.........you must be a bit crazy, no matter how much you like the property ! That's their problem. Let the incompetent and avaricious go bankrupt and sink. And the ones who really don't care about selling, let them, well, not sell. . |
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Post by darcy on Mar 7, 2008 15:16:48 GMT 1
I'd say an average price is around 100k€, which is around 15 average incomes. The cheapest apartment you can get in Zagreb is around 75k€, which is 11 average Zagreb incomes. Let me see, the apartment we're buying in Zagreb costs 10 (our) average incomes and it feels like a substantial financial burden. In Dubrovnik area that ratio is more like 40-50... . 15 avarage incomes. Before or after tax? I think this is after tax and that will make it even more affordable then in the UK. |
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