Prices expected to fall again.

[Madgolfer]

Apartments cheaper in 2012
from Croatian Times

Apartment prices in Croatia could drop another 10 per cent next year, real estate experts believe.

They warn that there are currently 15,000 unsold apartments available and the general economic situation in the country will not change much in the next year. In such circumstances, further price drops would seem a logical step to awaken the hybernating real estate market.

Domenico Devescovi who edits internet portal Centar nekretnina says that the capital Zagreb is likely to see price drops of about 10 per cent.

"The final price will depend on location. The prices will continue to drop also in other places," Devescovi says.

Maruska Vizek from the Institute of Economics says she expects prices to drop between five and 10 per cent.

When it comes to the Croatian capital, apartments in Novi Zagreb are likely to see the biggest drops in prices. The area has seen a lot of new construction, unproportional to demand.

Amongst the candidates for new price corrections are also apartments in the centre that have been waiting for buyers for years. For example, a square meter of an apartment in Zagreb's central neighbourhood Donji Grad cost 2,377 Euros. This year the price has dropped to 2,165 Euros. Pula is the Croatian city where prices dropped the most, or 30 per cent in the last two years.

The Croatian real-estate market was one of the biggest victims of the recession, daily Jutarnji List writes. The apartment prices in Croatia have been dropping year on year. The average price per square metre in October of this year was 1,757 Euros, a 14 per cent drop since the end of 2007.

You only have to look at the number of empty new apartments in Zagreb and even around here in Vrbovec and ask why do they keep on building more?

The same goes for shopping malls, half empty and still they keep building....OK its a somewhat different market I know but the principle is the same surely

[mambo]

The prices will come down even more in the coming years. The current prices are completely out of sync with the state of the economy, with the salaries and with the overall market.

In some cases prices can drop 60 - 70 % before we start getting into normal pricing again. Overdoing ?
Not really, in Spain prices have dropped like rocks as well, sometimes 75 % lower than a few years ago, but in some cases even this price drop does not salvage the project. Some new projects in Spain have been completely empty for years now, the developer does not have the money anymore to market the construction so it is simply abandoned. Perhaps it will stand there for 10 or 20 years before it gets demolished.
Many buildings in Croatia will meet the same fate. Only problem is that the owners don't know it yet, they will find out in a couple of years.

[Kaskader]

75% drop can not salvage the project as the developer bought the land at overinflated prices.

[mambo]

I was not talking about salvaging the project. With regard to projects the main question usually is: 'how much money does the developer need to have to keep the loss to a minimum'.
A non sold project simply costs a lot of money in maintenance, marketing, taxes, employees etc, so selling it with a small loss will prevent a money drain. If the developer does not want to sell it is a matter of waiting until he goes bankrupt. Then the banks will sell the project or it will stay empty.

In case of private houses it is just a matter of selling it in order to stop the mortgage of the bank or to fulfill the requirement of the bank to sell within 2 years after completing the house.

In markets like this there is no logic anymore. Normal behavior goes out of the window and it is basically everyone for himself. All the people who bought during the crazy years, against outrageous prices are now stuck with deep losses and they will not be able to stop the loss. They will take any offer they can get. Villa's in Spain, which once sold for 500,000 euro are now sold for 80,000 or even less. You will probably have to pay outstanding debts with the water and electricity companies, tax office etc, but you will have nice deals.
Only problem......................you may be the only one in the neighborhood, all other houses are empty. Near Toledo (Spain) there is a large housing project, couple of thousand houses, all empty, place is deserted. Who would want to live there now ?

[Madgolfer]

Here the banks are sitting on what seems to be a large stock of repossessed properties, yet seem reluctant to release them to the market at auction. A few do trickle through each month but nothing like the amount we know they have.

I fail to see how keeping these properties on the books helps their balance sheets? Unless they are hoping for a rise in property values.....against everyones predictions.

[Ribaric]

Nov 29, 2011 7:36:34 GMT 1 Madgolfer said:

Here the banks are sitting on what seems to be a large stock of repossessed properties, yet seem reluctant to release them to the market at auction. A few do trickle through each month but nothing like the amount we know they have.

I fail to see how keeping these properties on the books helps their balance sheets? Unless they are hoping for a rise in property values.....against everyones predictions.

I suspect it has more to do with the management hierarchy and decision making processes eithin the banks themselves. Finding a decision maker is probably a difficult thing to do so such tough decisions will tend to be shelved for fear of having one's name linked to a loss. Of course, doing nothing is a decision in itself but no so easily apportioned to any particular bank employee who are usually a cousin, brother-in-law, political ally etc. "Not my decision so not my fault" culture.

[ivetron]

Despite what they might say publically, the banks are holding on to most of it not all of these properties for a reason.

A lender takes back a home on the courthouse steps at $150k. The lender's appraiser determines the market value of the home to be $125k. The asset value is higher on the lender's books if it keeps the $150k home instead of converting it (selling it) to $125k in cash.

You flood the market with homes for sale and imagine what happens to the average home price..

[yeslehc]

Talking to locals down in Dalmatia, the majority think that when they go into Europe, ( if there is a E. U. left) that prices will rise? obviously they are still looking through rose coloured spectacles, even after you explain to them that their is no money in europe, and the people with money are holding on to it, it seems to go in one ear and out of the other one. frightening

[Madgolfer]

It seems to me that the banks are all looking to raise their cash reserves at the moment, especially the likes of Unicredit.

Clearing the decks of repossessed properties would seem like a no brainer.

HR courts are still putting through properties they have obtained via tax offices etc repos.

[zvekov]

MG
problem is, anything half decent on the coast line in a big toristic settlement will not sell at a giveaway price. There will be a buyer... (local or foreign).

[JudeC]

Using the principles of supply and demand I am guessing that prices will drop further if properties are passed for Usage following the current amnesty process. I understand that assessors were out in the Trogir/Ciovo area a week or so ago so it is happening.

[Madgolfer]

A strange scenario arises at the auction house....

You bid to buy a repossessed property being offered for sale by the Cro govt which has no building permit. You ask the judge how he can legally sell you the property which is in conflict with the current law. He says "I'm the judge and the land registry, tax office and notary must do what I say" (Or words to that effect)

The land reg however refuse to accept this and will not register the property in a new owners name without the said building permit etc.......

At an auction you "pre-pay" a deposit on any property you are interested in buying and you are then permitted to bid on that property. If you are the highest bidder you then get 30 days to pay the balance, less your pre-paid deposit.

If you don't pay the balance within the 30 days you loose your deposit. If you do pay the balance you cant then get the property (that's just been sold to you by the Cro govt) registered in your name until you get the building permit. You cant get the building permit because the Cro Govt still haven't told the local authorities how to issue them under the amnesty law...

I love Croatia. ;D

[mambo]

@ Madgolfer,

Please tell me this is not true ?
Please tell me that somewhere, somehow there is a sane person who stops this madness.

[Madgolfer]

Mambo I only wish it was a joke.

The Caro Govt have made it almost impossible for me (or anybody else) to carry on business as a real estate agent.

New laws have severely restricted the type of property I can sell and imposed unfair restrictions on most of the others.

We have three sales sitting on our desk since August this year that cannot progress past the pre contract stage even though all parties are in agreement. How ridiculous is that?

We cannot even conduct sales legally through the Govt own auctions sales. You couldnt write this comedy.

Our best information and advice is that it will take between 6 and 18 months for the constitutional courts to repeal the laws and in the meantime........we just have to wait it out?

It really does make me want to throw in the towel sometimes.

[murter]

prices have been falling and I have adjusted price of my property for sale few times during the last year. I doubt I will go further down since with this EURO crisis cash is not a safe haven for capital either. suddenly I realised that if I sell the property and end up with bunch of cash I might loose it in some fiscal crash that might occur in Eurozone.