The real estate turnover is slowing down, owners of used properties have unrealistic expectations and a state housing policy, although 200,000 state-owned flats are empty, has not been completed because population census data are still missing, a real estate business forum heard on Thursday.

The turnover is slowing down and trends are changing, Dubravko Ranilovic, president of the Real Estate Business Association, said at the forum organised by the Croatian Chamber of Commerce (HGK).

The number of transactions is falling and the year-on-year fall in the first half of this year was 9%, he said, adding that the fall is not the same in every county.

Property prices keep increasing but at a lower rate than before, he said, adding that the increase is slowing down in comparison with last year, when it was a two-digit increase.

Prices achieved are 15% lower on average than asking prices, he said, adding that one should look at prices achieved rather than asking prices.

The interest rate increases in the EU have affected the Croatian market, which is polarised, although buyers remain highly interested in newly-built properties, Ranilovic said, adding that foreigners’ interest in buying real estate in Croatia has shrunk.

A lot has been built in Croatia in the last two to three years, both infrastructure and housing, said Josip Zaher, the HGK president’s trade advisor.

That period was maintained by low interest rates and investment in housing, he said. A year ago, due to the pressure of the euro changeover, there was a surplus of kuna, which many tried to invest in real estate.

Today the situation is the opposite as banks, under pressure from central banks, started raising interest rates, which resulted in a decline in interest as real estate is no longer as favourable as investment capital, Zaher said.

The prices of capital are increasing and Croatia has opened other channels, such as bonds, for investing surplus money, he added.

Due to a shortage of good new properties in Zagreb and the coast, properties are retaining their prices, but there is a slowdown in both volume and prices, he said.