One in four people pay more than half of their monthly income for a home loan


ZAGREB, Nov. 11, 2021 – The average monthly mortgage payment for people who took out a loan between November 2020 and June 2021 ranges from 41 to 44 percent of their monthly income, according to a survey by the Croatian National Bank, a said the daily Večernji List on Thursday.

Housing loans totaled HRK 67 billion, up more than 10% year-on-year.

The high demand for real estate is accompanied by a constant increase in prices, which increase by 6-7%. At this rate, the price per square meter of an apartment could double in ten years.

“Croatia is a country with too many motives for the high demand for properties, from the tax treatment, tourism and low interest rates to the transfer of capital from the wealthiest banks, the APN (Croatian real estate agency), the fact that some actually need housing, some buy properties on behalf of companies to pay less taxes, and the presence of foreigners,” Maruška Vizek from the Institute of Economics of Zagreb.

“The market cannot offer enough properties for so many reasons for there to be a price drop. The only solution is proper tax treatment, which is not going to happen,” she added.

The central bank is concerned about potential risks and the fact that the crisis could spread to the banking sector. Governor Boris Vujčić said recently that house prices were rising more than incomes, but not building costs. All this increases the risks of their corrections in the future.

Most new home loans (28% of principal) are repaid with debt-to-income ratios of 30-40%. For another 26% of debtors, the ratio is 40 to 50%. For 23% of new home loans, the monthly payment is more than half of the debtor’s income, Večernji List said.

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