The Croatian property market is experiencing a peculiar paradox: while the number of transactions slows, property prices continue to rise, making older flats less affordable. This is largely due to the high cost of renovation, which can account for 20-35% of the total investment. For a 60-square-metre flat, renovation costs can easily reach €45,000 to €70,000, with more extensive projects costing even more. This is a significant financial burden for buyers, especially when considering the already high prices of older flats in major cities like Zagreb, Split, Rijeka, and Osijek. For instance, older flats in Zagreb typically sell for between €3,000 and €3,500 per square metre, while prices in Split can exceed €4,000 per square metre in sought-after locations. In Rijeka, prices generally range from €2,500 to €3,000 per square metre, while Osijek remains more affordable, with prices between €1,800 and €2,300 per square metre. The rising cost of renovation is not just a local issue; it reflects a broader trend of increasing property prices outpacing wage growth across the country. This trend is particularly challenging for first-time buyers and those on a tight budget, as the combined cost of purchasing and renovating an older flat can approach the price of a new-build home. As a result, buyers are advised to carefully assess a property’s condition before purchase and to set aside at least 15% extra for unexpected works. With labour and material costs continuing to rise, renovation has become a key financial factor in determining the overall value and affordability of a property investment. This situation raises a deeper question: how can the Croatian government and the private sector work together to make property more affordable for the average citizen? One possible solution could be to incentivize the development of more affordable housing options, such as social housing or co-living spaces. Additionally, the government could consider implementing policies that encourage the rehabilitation of older buildings, which could help to reduce the cost of renovation and make older flats more accessible to a wider range of buyers. In my opinion, the rising cost of renovation is a significant challenge for the Croatian property market, and it is essential that the government and the private sector take steps to address this issue. If not, the gap between the rich and the poor could widen, and the dream of homeownership could become increasingly out of reach for many Croatians.
