After the housing market went through a crisis and showed signs of a timid recovery last year, 2018 brought a boom in prices of apartments in Zagreb. New units easily get sold even before their residential buildings are finished, with prices on the rise.

According to data released by the state statistics bureau, the average price of a square metre of a newly built apartment was 12,390 kuna (1,654 euros) in the second half of 2017, or a whopping 24.8 percent up from the year before, tportal reported on Wednesday (March 21).

According to data from the classified ads website Njuškalo which tracks housing prices of older apartments, also point to a surge in prices. In February the average selling price was 1,789 euros per square metre, or 8 percent up from February 2017.

Analysts singled out subsidised housing loans as the main factor contributing to the surge in prices, as most of the loans were taken out by citizens in the second half of 2017, and most of them in Zagreb, which substantially affected the market.

“The measures introduced by the government did not allow buyers to dwell on them too long, as they were forced to react quickly. So in a short period of time we have seen a strong increase in both the demand for housing, and the numbers of completed sales,” said Boro Vujović, vice-president of the real estate association at the Croatian Chamber of Economy (CCE).

Other factors include an increase in projects recently built in attractive locations, where housing prices are above average to begin with, and also the increased numbers of tourists in Zagreb, which turned many apartments in the city centre into short-term rentals. Positive economic growth and lower interest rates also had an effect, causing increasing number of people to invest in real estate.