Despite the unstable times caused by the pandemic crisis, real estate is still highly desirable for investment. Given that the crisis has damaged a large number of business entities, it will take time for the purchasing power of the one from 2019 to return, regardless of the amount of capital there is.
If we consider the Government's estimate, then there is a decline in GDP for 2020 by 9.4% and the announcement of the Government for the projection of GDP growth for 2021 of 6.1%, which is reaching 2017 or 2018. Given the correlation between the fall in GDP and the fall in housing loan prices, it is to be expected that there will be a correction in real estate prices of up to 10%. In addition, the negative effects will be shown through the increase in unemployment. Such macroeconomic impacts have influence on banks and their credit policy.
The two main trends followed by banks are the moratorium, which is estimated to have been requested by 7% of credit indebted citizens and the tightening of credit conditions, where previously the ratio of appraised property to loan amount was 1: 1, now it is 70% of property value.
Taking these facts into account it is to be expected that there will be a cooling of the residential real estate market. There are several factors that affect whether we will have a short-term decline or a state of passivity. The first is GDP, and if the economy stabilizes faster, real estate prices will also stabilize faster. Furthermore, the higher the unemployment rate, the more cautious banks are in lending and interest rates on loans are more likely to rise. Currently, interest rates are 2.8 to 3%, and if they remain at these levels, the market will gradually recover. APN appears as a positive factor and price stabilizer, which will reduce the pressure of falling prices. The new deadline for APN is December 31, 2023, in which period the calls for subsidies will be published, and the novelty that has been introduced is that applicants must have registered residence at the address of the purchased or built property for at least 2 years from the end of loan subsidies.
Added: 15.02.2021.
Category: CROATIA REAL ESTATE NEWS
