ZAGREB, 9 April (Hina) - The rise in property prices is not only a problem in Croatia but across the EU, Minister Branko Bačić said in Parliament, rejecting claims by Social Democratic Party MPs that the new measures proposed in amendments to the law on subsidised housing construction would further increase prices.
We have decided on a refund of 50 % of VAT for those under 45 who are buying or building their first property, or a full refund of the real estate transfer tax in the case of purchasing a used flat or buying from a private individual, and we have not observed any increase in property prices due to this announcement, said the minister of physical planning, construction and state assets.
He added that sellers cannot know whether potential buyers will be entitled to a refund of real estate transfer tax or VAT.
Sabina Glasovac (SDP) said the 50 % VAT refund has already been incorporated into property prices, while Mišo Krstičević (SDP) said tax refunds will end up in the pockets of property developers. “Economists from the Croatian National Bank and the International Monetary Fund claim subsidising home purchases with state budget funds undoubtedly leads to an increase in property prices,” he added.
“Have you envisaged any safeguards to prevent subsidies from leading to higher property prices, as happened when APN-subsidised loans were introduced?” asked Marija Lugarić (SDP). APN is the acronym of the Croatian Real Estate Agency
Bačić said he would agree with the claim that the periodic nature of APN loans contributes to property price growth only if the increase in property prices were not more pronounced in EU member states where such subsidies were not in place.
Boris Piližota (SDP) was interested in projections regarding how many young people would realistically be able to make use of the VAT refund measure, i.e. how many under the age of 45 are creditworthy.
The best analysis of how many flats will go through the refund procedure is based on the final year of APN loan implementation, during which around 6,000 flats were involved annually, said Bačić.
He voiced confidence that next year the European Commission will adopt a document on affordable housing, which he believes will be accompanied by a financial instrument enabling member states to invest in affordable housing.
By the end of this year, he announced the adoption of a new Rental Act that will regulate the market and contribute to greater security for both landlords and tenants, as well as a new Construction Act aimed at simplifying the procedure for obtaining building permits and reducing documentation requirements for the construction of houses and residential buildings.
