Modern times bring new problems, but also modern solutions. The global pandemic has made the economic situation of many countries difficult, and Croatia, due to its previous instability, is quite affected by all the new changes. But why, apart from the pandemic, is the real estate market stable?
Some have decided to take a new step and precisely because of this stagnant world situation, they introduce dynamism into their lives by buying real estate. Subsidized housing loans, or APN loans, help them in this.
The Agency for Legal Traffic and Real Estate Brokerage has been busy lately. Subsidization has motivated people to get “their piece of the pie” and the demand for apartments is growing. Thus, real estate prices in some parts of Zagreb have grown quite a bit, and even compete with European countries with a much better standard of living.
What is the logic behind subsidized loans?
The state introduced subsidized loans in order to motivate young people to stay in the state, to find a job and to further help the economic and social situation in the state. The subsidy was supposed to be the “missing piece of the puzzle” that would be stronger than the various questions and doubts that a young person in Croatia could ask.
A square meter of an apartment in Zagreb after the pandemic became 9% more expensive compared to the situation before. Although that number does not seem large, when we consider the starting prices, which were quite large in themselves, the situation is by no means idyllic.
What is the problem with subsidized loans?
Like everything, APN credits can be used in good and bad ways. There are always people who take advantage of these situations in order to “defraud the state”, that is, to get by cheaper, even though they do not belong to the category of people for whom the loan is really intended.
So some decided to use these subsidized loans to buy an apartment or real estate, which after some time became an income – space for tourists, students, business… They started renting space and thus taking the opportunity to others, to those who could really use that real estate for the solution of their housing situations.
There are also cases in which people gave up properties they already have and transferred them to others, so that they could then get another subsidized property. As the price of a square meter has increased, and the subsidy and purchase process must be fast, many young people are no longer motivated to take the subsidy because even with it, the prices are too high.
An additional problem specific to Croatia is the problem of centralization – real estate in or around Zagreb is subsidized. In second and third place are Rijeka and Split, and the rest of the country is barely in line. Encouraging the market outside the capital could be of great benefit, but someone needs to start the whole process and distribute the number of loans by regions of the country.
Is APN a thing of the past?
Many people think that APN is “outdated technology” and that it is time to switch to some other options. One of the proposed solutions is the construction of social housing, but there is a problem with the cooperation of the state and the planning of the entire project. The creation of neighborhoods and areas where, in the end, there will again be “social cases” that extract all possible incentives from the state should be widely avoided.
Anyone up to the age of 45 can apply for the tender, if they do not own an apartment or house, and the state in return pays at least one third of the monthly installment of the housing loan for five full years. There are too few rejected requests and the state will not be able to maintain such a system in the long term.
Nevertheless, this year's season of APN's work opened at the end of March – the project lasts until HRK 50 million is spent, and the average interest rate ranges from 2 to 3 percent (both effective and nominal rates).
What instead of APN?
In order to reduce the profits enjoyed by the banks and in order for the state to get some benefit from the whole situation, APN's loans should be canceled or modified so that a much smaller number of applications are approved. It is proposed to introduce a certain advantage for the highly educated and artisans. The state must definitely take the initiative and start building real estate so that the price will drop because the supply will be higher and the demand will be the same.
In this way, young people will be able to buy real estate without credit, and they will be satisfied with the principle on which the state functions – whether they have the option of getting a subsidized loan or not, many young people choose to leave the state as a matter of principle. So, in these unstable times when we don't have security about our incomes, the state should be the one who takes the risk and is responsible for it, not a small person. However, it seems to us that these loans will only grow in popularity.
Pantovčak real estate agency will help you with the APN loan
If you are planning to buy an apartment and need help with the approval of an APN loan, the Pantovčak real estate agency can help you with advice and when collecting all the necessary documentation. Contact us with confidence!
