Housing prices in Croatia rose by more than 6 percent in 2018 compared to the year before, the state statistics bureau said in a report released on Wednesday.

According to the report, the overall increase in prices on the housing market was put at 6.1 percent. Prices of newly built housing units rose by 3.6 percent, while the prices of pre-existing housing units jumped by 6.6 percent over the last twelve months.

By area, the largest year-on-year increase was in capital Zagreb, where property prices rose by 8.5 percent, almost double from the 4.4 percent increase in property prices along the Adriatic coast.

In the rest of the country – which includes all areas outside Zagreb and away from the coastline – prices dropped 0.3 percent in 2018 compared to 2017.

Real estate traders warned late last year that the local market is experiencing a surge in prices, with the average price of a square metre of an apartment hovering around €2,000 in Zagreb, around €3,000 in Croatia’s second city of Split, and even up to €4,000 in the southern city of Dubrovnik.

The increase in property prices in Zagreb is largely attributed to the exploding popularity of the capital as a destination for tourists from abroad, which led to a high demand for buy-to-let apartments used for short-term rentals.

Similar factors have pumped up real estate prices in coastal areas, especially in areas underserved by hotel-type properties.

On the other hand, areas in central and eastern parts of the country have suffered the most from massive population drain caused by emigration and low birth rates, which drove real estate prices down, with some areas in the eastern region of Slavonia reporting average asking prices of apartments of only €800 euros per square metre.

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