The rise in property prices was record high in Q1 2022 at 13.5% year on year in Croatia, while in the previous two quarters it was 9%, Jutarnji List daily said on Monday.

According to Eurostat, the rise in property prices accelerated throughout the EU to 10.5% in Q1, the most since Q4 2006. It exceeded 10% in 17 member states.

Croatian Central Bank economist Vedran Sosic said this was due to higher construction costs, still very favourable financing conditions, and the accelerated inflation, which pushed salary growth. Another reason are subsidised housing loans, he added.

According to Eurostat, member states with higher inflation and therefore higher interest rates recorded the highest increase in property prices. In Q1, they rose the most in the Czech Republic (+24%), Estonia (+21%) and Hungary (+20.6%), while rising the least in Cyprus (+1.1%), Finland (+4.3%) and Italy (+4.6%).

Since 2015, property prices in Croatia have increased by 40% on average, more than the average EU increase (+37.4%).

In the months ahead, due to higher interest rates and the decrease in the prices of metal and other raw materials affecting construction costs, the upward trend on the real estate market could stop, Jutarnji List said.

Experts forecast a fall in the demand for houses and apartments due to a lower interest in loans and expectations that, with the economic downturn, citizens with surplus income, both domestic an foreign, will be less ready to invest, the daily added.