The Croatian property market is experiencing a peculiar phenomenon: despite a slowdown in transactions, property prices continue to rise, making older flats less affordable. This is largely due to the high costs associated with renovation, which can account for a significant portion of the total investment. For instance, renovating a 60-square-metre flat can easily cost between €45,000 and €70,000, with more extensive projects costing considerably more. This is a major concern for buyers, as property prices continue to outpace wage growth across the country. In Zagreb, older flats 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. According to market estimates and data from Emajstor, basic renovation costs currently range from €400 to €600 per square metre, while comprehensive refurbishments, including new installations and fittings, usually cost between €700 and €1,500 per square metre. As a result, renovation expenses now account for around 20 to 35 per cent of the total investment, and potentially more in older buildings where unforeseen structural or installation issues arise. This trend is particularly concerning for first-time buyers, who may struggle to afford the high costs of purchasing and renovating an older flat. It also highlights the growing affordability challenges across Croatia, as the combined cost of purchasing and renovating an older flat increasingly approaches the price of a new-build home. In my opinion, this situation is a result of the strong demand for older flats, which is driven by factors such as the desire for a more established neighbourhood and the potential for future development. However, the high renovation costs are a significant barrier to entry for many buyers, and the situation is likely to worsen as labour and material costs continue to rise. This raises a deeper question: how can we make older flats more affordable without compromising on the quality of the renovation? One possible solution is to encourage the development of more affordable renovation options, such as modular kitchens and bathrooms, which can reduce the overall cost of refurbishment. Additionally, the government could provide incentives for buyers to purchase older flats, such as tax breaks or grants for renovation projects. In my view, the Croatian property market is at a critical juncture, and it is essential to address the affordability challenges associated with older flats. By doing so, we can ensure that the market remains accessible to a wider range of buyers and that the benefits of property ownership are shared more equitably across society.
