CNB Governor: Real estate prices will fall, but not chaotically

Governor of the Croatian National Bank (CNB) Boris Vujčić spoke on Tuesday at the conference "Merge-Invest-Develop: 10 years of Croatia's membership in the EU". Vujčić stated that the main benefit of joining the European Union is access to a market of around 500 million people, which had a positive effect on the export and competitiveness of Croatian companies.

Membership in the eurozone has further increased the attractiveness and competitiveness of the Croatian economy, among other things, due to lower financing costs, with the average interest rate on corporate loans even slightly lower than the eurozone average.

In addition to more favorable borrowing conditions, business costs are also lower for entrepreneurs, due to the elimination of transaction costs, and the estimate is that annual savings for companies amount to around 160 million euros.

What will be seen even better in the future is that Croatia has become a more attractive place for foreign investments, due to the removal of currency risk, and there is also entry into the Schengen area, said Vujčić.

Today, the CNB revised the Croatian GDP growth projection for this year from 1.5 to 2.9 percent, and in addition to the mentioned private investments, there are also improved expectations when it comes to public investments from EU funds, as well as the effects of a successful tourist season. .

When it comes to the real estate market, Vujčić said that a drop in prices is already visible in the Eurozone, not yet in Croatia, but a noticeable decrease in the number of transactions, and such an occurrence usually precedes stabilization and a drop in prices.

Asked about the European Central Bank's (ECB) warning that housing prices in the eurozone could fall "chaotically" due to the impact of high interest rates on their availability and attractiveness, Vujčić believes that "prices will not fall in a way that could be called chaotic."

Tržište nekretnine, 08. Jun. 2023.