Croatia Housing Costs Highest in EU Compared to Wages

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As reported by IndexHR, and according to an article published on the VoxEU portal, of all EU nations Croats (in Croatia) have to work the longest to afford an apartment.

The authors of the article are Jean-Charles Bricongne, deputy director of the Banque de France, and Allesandro Turrini, head of the European Commission’s Economic and Financial Affairs Department, and both are also members of CEPR (The Center for Economic Policy Research).

CEPR is a network of more than a thousand scientists and researchers from European universities and is, among other things, also the publisher of VoxEU, an influential online platform for public policy analysis and commentary by economic experts.

Real Estate Prices in 40 Countries

Bricongne and Turrini wrote an article entitled “Estimating Real Estate Prices: Insights from Price Level Data,” which looks at how much home prices in 40 countries in Europe and the world relative to wages in those countries.

In other words, the article looks at how many citizens of several countries, forty of them in all, can afford to buy an apartment with the wages they earn. There is bad news for Croatia: in terms of salaries, we have the most expensive real estate of all EU member states, while in the world real estate is more expensive only for citizens of Australia, South Korea, New Zealand and Russia.


Most Expensive Apartments in the EU

“Identifying inflated residential real estate prices has become an integral part of macroeconomic surveillance,” the authors indicated at the beginning of their article, adding that a detailed database of real estate prices in all countries around the world should be created so that overvalued real estate can be more effectively analyzed.

In Croatia, real estate is most definitely overvalued, given the fact that according to 2016 data, which is based upon the survey of the two economists, the average Croatian needs to work about 15 years to afford a 100 square meter apartment. The apartment price-to-income ratio for Russians is the worst of all surveyed nations. They will need 20 annual salaries to buy the same kind of apartment. Nevertheless, in comparison to other EU member states housing is obviously the most expensive in Croatia.

Data from 2016: Present Situation Even Worse

In contrast, an average German needs just eight years of earnings to buy a 100 square foot apartment. The most favorable real estate prices are in the United States, where about three annual salaries are required to buy 100 square meters of living space.

It must also be emphasized that the authors in their research were guided by data from 2016. In the meantime, real estate prices in Croatia have exploded, while wages have not increased at roughly the same pace. That means today’s ratios are even worse for Croats, who now need MORE than 15 years of earnings to buy a 100 square foot apartment.

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