Over the past few months, the Croatian property market has seen a significant shake-up—particularly in the rental and sales sectors. A spike in the number of rental listings in Zagreb, alongside increased property listings outside the capital, has drawn attention from policymakers and real estate professionals alike. At the center of it all? A newly introduced property tax that’s pushing property owners to rethink how they use their assets.
Rental Listings Surge in Zagreb
The most noticeable change has been in the rental market. According to recent data, the number of apartments available for rent in Zagreb jumped by nearly 20% in just two months—from 4,007 listings at the end of January to 4,757 by late March.
This surge isn’t limited to Zagreb. While the capital remains the most dynamic part of the Croatian property market, other regions have also experienced a moderate increase in rental and sales listings, with growth hovering around 2%.
Sales Listings Climb Outside the Capital
Outside Zagreb, the number of houses listed for sale rose from 47,048 in January to 48,171 in March. Experts believe this sharp increase, especially noticeable in March, is tied to the March 31st property tax deadline. Property owners likely rushed to put their homes up for sale or rent to avoid paying the new tax on vacant properties.
The Goal: Make Croatian Property Market More Affordable?
According to the Croatian Ministry of Finance, the tax was designed to encourage owners to bring unused properties into active use—mainly through rentals—ultimately aiming to make housing more affordable. Dario Runtić, a special advisor to the ministry, noted that the growing supply could help ease rental prices over time.
But has the policy hit its mark yet? Not quite.
Experts Offer Different Takes on Croatian Property Market
Some tax experts are skeptical that the tax alone is behind the trend. Ivan Čevizović, President of the Croatian Chamber of Tax Advisors, believes another factor may be at play: many short-term rental hosts, facing rising costs and tighter regulations, may be switching to long-term rentals instead. This shift could account for much of the new supply entering the Croatian property market.
From Under the Table to On the Books
The new tax changes have had another effect—bringing informal landlords into the legal system. Many property owners are now registering their tenants for the first time, either to comply with tax rules or avoid steep penalties.
Mislav Krišto, a real estate agent, says this will likely lead to higher rents, as landlords pass on the cost of taxes to tenants. He estimates that only 1 in 10 landlords previously reported their rental income. For example, a landlord renting a Zagreb apartment for €600 per month earns €7,200 annually—while paying just over €600 in tax. If caught avoiding tax, however, they could face fines up to €6,630, plus back taxes and interest.
Prices Still Climbing in Croatian Property Market
Despite the increased supply, rents are still rising. That means the central aim of the policy—more affordable housing—has yet to be achieved. This presents a challenge for the future of the Croatian property market, which remains under pressure to balance availability with affordability.
Final Thoughts
The Croatian property market is clearly in flux. Whether the new property tax will lead to long-term affordability remains to be seen. In the short term, it’s nudging owners to put idle properties to use and bringing more rentals into the legal fold. But with rising living costs and inflation, the ultimate impact on tenants is still unfolding.
What’s next for Croatia’s housing market? As March 31st passes and new data rolls in, we’ll soon find out if this policy shift is a step toward affordability—or just another burden for renters.
Source: tportal.hr
