The state-owned Real Estate Agency (APN) on Monday started receiving applications for housing loan subsidies as part of the eighth round of invitations for such applications, and in the first half an hour banks submitted 298 applications by their clients.

Physical Planning, Construction and State Assets Minister Branko Bacic said the model was very encouraging and that he disagreed with criticism that it was the main and most important reason for housing prices skyrocketing in Croatia.

The experiences of other countries that joined the EU over a ten-year period show more drastic increases in real estate prices, of more than 85%, he said, noting that Croatia is a member of both the euro area and the Schengen area and that one in three properties in Croatia is bought by foreign nationals.

New housing strategy: Subsidies to stay?

How much the rise in real estate prices is due to housing loan subsidies is to be seen when a new housing strategy is adopted by the end of this year or the beginning of the next, according to Bacic.

By this time next year the status of the law on housing loan subsidies, which is in the final year of its implementation, will be known “so that the competent ministry and the government can decide on new models – housing loan subsidies, state-subsidised housing construction or something else”, said Bacic, noting that the new housing strategy would envisage “continuing the implementation of the law as it is now or an amended version.”

This week the government will make a decision on defining the housing strategy, he said, adding that it would take into account the fact that the sale of apartments is not the only way for citizens to have their housing problem solved and that flats could also be built to rent them to young people at affordable prices.

Consideration is being given to the idea to embark on that model together with local government units so that the price of such flats is lower, he said.

APN director Dragan Hristov said that the housing loan subsidies scheme has been implemented for the seventh consecutive year, that around 27,500 applications have been approved so far and that this year subsidies will amount to €9.3 million, which is sufficient for some 5,500 applications.

The housing loan subsidies scheme refers to people under the age of 45 who do not own an apartment or a house and who meet the conditions for approval of a housing loan.

Loan subsidies refer to the purchase of a flat or a house, that is, the construction of a house, and subsidies amount to a maximum €1,500 per square metre for loans in the maximum amount of €100,000, with the repayment deadline not being shorter than 15 years.

Subsidies are granted for the first five years of loan repayment, with the possibility of a two-year extension for each child born or adopted during the loan subsidy period.