Croatia property buying to get easier

The Croatian government is set to lift the current restrictions on the EU citizens buying property in Croatia on 1st February 2009.

Currently most buyers/investors have to set up a Croatian company to buy property in Croatia. However, from next year EU nationals will be able to own Croatian property in their own name (apart from some rural land).

How will this affect the Croatian property market?

Croatia is primarily a second home destination and does not attract as many second home buyers as the likes of, for example, Spain or France.

This is primarily due to:
- access being more difficult (ie flights),
- weather not as good, particularly in the winter,
- property prices that are already high and
- until very recently the complete lack of mortgage finance available for foreigners.

The lifting of restrictions is likely to see some increased interest in the Croatian property market though (relatively) high prices and poor mortgages still remain very large barriers to a flood of foreign investors in to the Croatian property market.

Mortgages in Croatia

Until recently it was not practically possible to obtain a mortgage in Croatia as a foreigner.

There are signs now that some mortgage products are becoming available, though not with very attractive conditions (eg 50-60% LTV, 7%+ interest rate, and only 15 year terms). As they are not used to dealing with foreigners investors can further expect a long complicated and difficult process to be able to obtain a mortgage in Croatia.

Croatian property market predictions

Over the next year I see the Croatian property market, on the whole, continuing to stagnate.

With the prospect of EU membership in, potentially, 1-2 years time things in medium term should be looking up for the property market in Croatia.

However, for the moment I see no real reason to invest in property in Croatia when there are far better and safer markets elsewhere in Europe, unless of course you wish to buy a holiday home then the decision making process is somewhat different.

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