Monthly Briefing, Vol. 4. No. 1 (HR) April 2025
Croatia’s National Housing Policy Plan Until 2030: A New Direction for Affordable Living
Valentino Petrović
Summary
This article provides an overview of Croatia’s housing market, outlining key challenges and policy responses ahead of 2030. It discusses galloping property prices, delayed housing independence among youth, and high rates of overcrowding, placing Croatia among the EU’s worst performers. Past legislative efforts have lacked strategic coordination, prompting the adoption of a National Housing Policy Plan which is focused on affordability, sustainability, and improved land use. The plan includes key measures such as tax incentives, increased supply of affordable units, and revitalization of unused properties. It puts special emphasis on young people, who are expected to benefit from the long-term affordable rental program and 50% of VAT refund for buying newly-constructed apartments.
Introduction
After several years of anticipation and political debate, the Croatian Government has finally adopted the National Housing Policy Plan Until 2030, a strategic document long discussed in expert and political circles, but delayed for too long. The National Plan arrives at a moment when housing has become one of the most pressing socio-economic challenges in the country, particularly for younger generations who are increasingly unable to resolve their housing situations due to skyrocketing property prices and a severe lack of affordable rental options. While political parties across the spectrum have routinely acknowledged the gravity of the issue, especially during the recent election campaigns, concrete solutions have been limited, fragmented, or short-lived. The adoption of this long-awaited policy marks the first serious attempt by the state to coordinate housing efforts under a unified strategic framework, with the goal of offering long-term stability in an otherwise volatile housing market.
However, the significance of the document extends beyond housing alone. The National Plan aims to address broader demographic concerns, including the outmigration of young people and declining birth rates, by creating conditions for stable and predictable living. At the core of the policy is the recognition that a functioning housing system is not just about buildings or statistics, but about affordability and whether young people can realistically see a future for themselves in Croatia. High property prices, coupled with stagnant wages and a lack of long-term rental options, have made homeownership and independent living increasingly unattainable for young Croatians. Despite repeated promises, the political response to these structural challenges has been inadequate. Now, with the National Housing Policy Plan in place, expectations are high. Whether this new document will result in real change remains to be seen, but its adoption represents a crucial step toward restoring housing as a basic social right and tackling long-standing demographic challenges.
The Overview of the Housing Market in Croatia
To illustrate the broader shifts in Croatia’s housing landscape following independence, it is necessary to first examine the transition in housing policy that accompanied the country’s departure from socialism and the move toward a market-based economy[1]. After nearly half a century under a socialist regime, the early 1990s marked a turning point: the enactment of the Law on the Sale of Socially-Owned Apartments (Official Gazette 43/92 to 78/02) which enabled citizens to purchase the apartments they had previously occupied as tenants under favourable conditions provided by the state. This large-scale privatization of housing occurred during the Homeland War and represented a significant departure from the prior system, under which employees contributed a portion of their wages to a republican housing fund. Companies would purchase apartments from construction firms and assign them to employees based on waiting lists. In addition to these socially distributed units, a share of the housing stock was bought on the open market, while many families independently financed the construction of their own homes. By 2005, a total of 318,011 state-owned apartments had been sold, thus effectively ending the state’s direct role in housing provision. With the state withdrawing from ownership and leaving housing to the forces of the market, the remaining real estate assets were largely held by private businesses (3,009 units), religious organizations (1,300), and other entities (3,100). One of the most consequential outcomes of this shift is the high rate of homeownership in Croatia: 91.1% of citizens live in homes they own. This figure significantly exceeds the EU average of 69.1%, although it mirrors the situation in other countries that also transitioned from socialist housing models.
As for the housing prices[2], following the collapse of the real estate market in 2008, the prices experienced a period of decline and fluctuation, reaching their lowest point around 2016. However, construction activity fell even more sharply. Since 2016, Croatia has seen a steady upward trend in both housing prices and the number of completed residential units. This trend accelerated from 2022 onwards, significantly affecting housing affordability. According to the Croatian Bureau of Statistics (DZS), the total number of completed apartments in 2023 reached 16,552, marking a 4.3% increase, while average prices rose by 3.2% compared to 2022. The latest available data[3] show that in the first six months of 2024, the average price per square metre of newly built apartments in Croatia was EUR 2,337, while in Zagreb it reached EUR 2,830. For comparison, the average prices in 2023 stood at EUR 2,246 nationwide and EUR 2,684 in Zagreb. In 2022, the figures were EUR 2,188 and EUR 2,578, respectively.
Table 1. Average prices of sold new apartments per 1 square meter.
Several structural factors have contributed to the ongoing rise in housing costs. The price of construction materials, particularly imported ones such as steel, has increased consistently. Simultaneously, a shortage of construction workers and a rise in labor costs have amplified the issue. In addition, a large part of the construction industry’s workforce and materials has been used for infrastructure projects funded by the EU, such as those supported by the Cohesion Fund, the Solidarity Fund, and the National Recovery and Resilience Plan. Because of this, there are fewer resources available for building homes. Lastly, shifts in the usage of housing units, especially the conversion of long-term rentals into short-term tourist accommodations, have reduced the number of units available to the general market, thereby constraining supply. The affordability gap is thus widening, with housing prices outpacing average income growth. This is evident in urban centers driven by tourism, where the demand for short-term rental properties further inflates prices. As a result, the supply of housing units remains relatively price-inelastic, while demand continues to grow and pushes prices even higher.
Expensive Housing, Late Independence, and Overcrowding in Croatia
According to Eurostat, between 2018 and 2023[4], Croatia experienced a significant surge in housing costs, with property prices increasing by 62% and rental prices by 18%, both figures notably surpassing the EU averages of 29% and 9% (Figure 1). This trend places Croatia among the EU member states with the most pronounced housing cost escalations during the investigated period. In comparison, Hungary recorded the highest rise in property prices at 87%, followed by Lithuania and Estonia with increases of 74%. On the other hand, some EU member states saw more modest growth in housing costs. Italy reported a 10% increase in property prices, while Cyprus and Finland experienced minimal changes, with housing costs remaining relatively stable over the five-year period. Croatia finds itself at the top of yet another concerning European ranking, the one related to housing independence among young people. The issue of delayed departure from parental homes remains particularly pronounced in the country, which further deepens socio-economic challenges that continue to impact Croatian youth. Eurostat figures released in September 2024[5] show that the average age at which young Europeans left their parental homes was 26.3 years in 2023, slightly down from 26.4 years in 2022. Among EU member states, Croatia recorded the highest average age at 31.8 years, followed by Slovakia at 31.0 years, Greece at 30.6, Spain at 30.4, and Bulgaria and Italy, both averaging 30.0 years. Conversely, the youngest ages were observed in Finland (21.4 years), Sweden and Denmark (each 21.8 years), and Estonia (22.8 years). In addition, the data reveal that 31.2% of the general population and 43.3% of young people between 15 and 29 years of age in Croatia lived in overcrowded households, far above the EU average of 16.8% and 26%.
Figure 1. Comparison of changes in property prices and rental prices from 2018 to 2023, values expressed in percentages.
Past Legislative Efforts and Their Impact on Housing Affordability
Efforts to improve housing affordability in Croatia have so far been implemented through isolated legislative measures, often without the support of in-depth analysis or comprehensive strategic planning. Rather than forming part of a broader national housing policy, these attempts have relied on individual laws aimed at targeted improvements for specific population groups. One of the most notable legislative instruments is the Act on Socially Encouraged Housing Construction (Official Gazette 109/01 to 58/21), in force since 2001. Amendments introduced in 2014 expanded the law to include affordable rental options with the possibility of eventual ownership. Another initiative is the Act on Housing Provision in Assisted Areas (Official Gazette 106/18, 98/19, 82/23), which targets demographically and economically vulnerable regions. From 2017 until late 2023, the Act on Subsidising Housing Loans (Official Gazette 65/17 to 146/20) was in effect, offering state support for mortgage payments. Although the law expired nearly two years ago, it had a significant impact on housing access during its implementation, and its expiration is considered one of the main drivers behind the development of the National Housing Policy Plan. The Act helped citizens purchase 32,556 apartments on the open market, aided by direct, non-repayable government support. Under the Socially Encouraged Construction program (POS), where apartments were made available at capped prices (up to EUR 1,490 per square metre until 2024) and financed through a hybrid loan model involving both commercial banks and the state, a total of 9,072 housing units were built and sold. The support has also been provided through various housing schemes that targeted assisted areas (previously known as Areas of Special State Concern), where state-owned housing units have been allocated to eligible residents. As of now, 28,730 such units have been distributed through state management and allocation mechanisms.
The Objectives of the National Housing Policy Plan Until 2030
The National Housing Policy Plan was adopted by the Croatian Government on 26 March and it aims to achieve the three main objectives: affordable housing, sustainable housing, and space serving the function of housing. The National Plan includes two action plans: the first covering the period from 2025 to 2027[6], and the second from 2028 to the end of 2030. For the first objective, affordable housing, two targeted measures have been introduced to support its achievement: (I) The improvement of the legal and governance framework; and (II) Increase in the supply of housing units for affordable housing.
When it comes to the first measure, the National Plan aims to strengthen the legal protection of rental relationships, therefore, ensuring equal security and stability for both tenants and landlords. Legislative changes will be introduced, particularly in the tourism and hospitality sector, to encourage local governments to confront the challenges of short-term rental and limit the expansion of this type of housing. The plan foresees strengthening the role of the Croatian Real Estate Agency (APN), which is poised to become the central authority for implementing Croatia’s housing policy under a new Affordable Housing Act. The measure will also support the adaptation of residential buildings for persons with disabilities and improve everyday accessibility for elderly residents and families with children, through co-financing the installation of elevators in existing buildings. In addition, financial support for young people, such as first-time buyers, will come through a 50% VAT refund or full reimbursement of real estate transfer tax, helping them to make homeownership more accessible during an important phase of personal and financial independence. For the second measure, the National Plan proposes targeted investments and incentives, including the renovation and reuse of vacant state-owned housing units. Properties that are managed by state-owned companies and institutions will be repurposed for affordable rental schemes, while privately owned vacant units will also be activated through rental programs. Additional housing will be created by converting unused public buildings (e.g. schools, military sites), constructing new residential buildings, and promoting housing in suburban and rural areas. Further measures include improving student dormitories to free up rental stock and expanding care facilities for the elderly population to reduce waiting lists and ease housing pressure on multi-generational households.
The second objective, sustainable housing, focuses on the energy renovation of buildings to reduce energy use for heating and cooling, as well as lowering greenhouse gas emissions, and supporting building decarbonization to promote climate resilience and sustainable living. Through the Energy Renovation Program for multi-residential buildings (up to 2030), actions will include comprehensive upgrades, use of renewable energy, efficient district heating systems, and low-carbon materials. Special focus will be placed on renovating housing within historic urban areas to prevent decay and reduce rental pressure in tourist hotspots. The number of households living in energy-renovated housing units for sustainable living is expected to reach 2,762 in 2025, increase to 5,453 in 2026, and rise further to 8,837 by 2027. The third objective, space serving the function of housing, centres on improving land use management to support affordable housing. This includes enabling access to public urban land for private and non-profit developers through preferential financing tools, such as land purchase, repurposing, and development. Greater use of building rights will accelerate project delivery, while active land policy will allow state and local authorities to influence land use and planning more effectively. Investments in urban infrastructure and public amenities will support residential development and improve service access across urban areas. Through the objective, local spatial planning will be encouraged to identify underused or abandoned buildings suitable for affordable housing, while incorporating principles of green infrastructure and circular use of space and materials. Where possible, eco-design will be applied in construction to align resource use with building functions, reduce waste, and support sustainable urban development. The Environmental Protection and Energy Efficiency Fund (EPEEF) is considered a main partner in this objective.
Affordable Housing Options for Young People
The National Housing Policy Plan places a strong emphasis on supporting young people in their pursuit of affordable housing, recognizing the unique challenges they face in accessing stable and affordable living options[7]. First, the new POS 2.0 program is planned to offer flexible housing options, including purchase, rental, and rent-to-own models, making it easier for young people and families to find suitable living arrangements. Through this program, up to 8,000 new housing units will be built by 2030. Second, the Affordable Rental Program will provide 9,000 long-term rental units by 2030. These units will have leases ranging from 3 to 10 years, with rents below market value, and contracts will be managed by the APN. The program will focus on utilizing vacant and unused properties from both the public and private sectors, creating affordable living spaces for young people and families. Third, young people under 45 years of age, as well as families with limited income, will benefit from significant tax incentives, such as 50% VAT refunds when buying new real estate and 100% property tax refunds on used real estate, helping ease the financial burden of homeownership. Fourth, the plan envisions expanding housing options in rural and suburban areas, offering 2,000 new homes in smaller communities by 2030. This supports young people who wish to escape urban congestion while still accessing affordable housing. Fifth, the activation of vacant homes and brownfield sites will contribute to the development of affordable housing, thus, ensuring that unused properties are transformed into livable spaces. If the state’s calculations are correct, more than 20,000 affordable housing units will be ensured by 2030.
Conclusion
The adoption of the National Housing Policy Plan Until 2030 will hopefully mark a turning point in Croatia’s approach to housing, as the country now has a comprehensive strategic framework aimed at addressing key challenges such as affordability, demographic decline, and housing availability. By prioritising young people, the National Plan acknowledges the structural difficulties they face in achieving housing independence; difficulties that have been widely recognised in political, economic and social discourse but rarely met with tailored and sustained action. The government’s commitment to expanding affordable housing, investing in underused public assets, and providing tax relief for those under 45 years of age is an encouraging step, particularly in light of persistently high property prices and limited rental options. More importantly, recent developments suggest that political momentum behind the National Plan is beginning to translate into the much required legislative change.
On 11 April, the Croatian Parliament adopted amendments to the Act on Socially Encouraged Housing Construction[8], aiming to support young people purchasing their first property. One of the key changes is the increase in the maximum sale price of POS apartments, from EUR 1,792.50 to EUR 1,912 per square metre, in order to align with the average market prices in 2024. According to the explanation provided in the legislative proposal, a significant rise in construction costs and housing prices had made it difficult to secure contractors under the previous price ceiling. As a result, public procurement procedures were often cancelled, with construction companies showing little interest in bidding for POS projects under outdated economic conditions. During the parliamentary debate, Deputy Prime Minister and Minister of Physical Planning, Construction and State Assets Branko Bačić noted that the APN holds building permits for 732 apartments, which will now move into the construction phase thanks to the revised pricing cap.
The recent steps indicate a meaningful shift from policy design to implementation; however, it remains to be seen how effectively the measures outlined in the National Plan will be carried out. Nonetheless, they offer a necessary starting point toward building a more stable and accessible housing system.
[1] Ministry of Physical Planning, Construction and State Assets of the Republic of Croatia. 2025. The National Housing Policy Plan Until 2030 https://mpgi.gov.hr/UserDocsImages/dokumenti/NPSP/2025_03_26_NPSP.pdf.
[2] Ibid.
[3] The Croatian Bureau of Statistics. 2024. Cijene prodanih novih stanova u prvom polugodištu 2024. https://podaci.dzs.hr/2024/hr/77354.
[4] Čagalj, Ivo. 2024. Rastu cijena nekretnina u Hrvatskoj kao da nema kraja, pogledajte brojke. Tportal.hr https://www.tportal.hr/biznis/clanak/rast-cijena-nekretnina-u-hrvatskoj-kao-da-nema-kraja-pogledajte-brojke-20240715?meta_refresh=1.
[5] Eurostat. 2024. Age of leaving the parental home steady in 2023
https://ec.europa.eu/eurostat/web/products-eurostat-news/w/ddn-20240930-2.
[6] Ministry of Physical Planning, Construction and State Assets of the Republic of Croatia. 2025. Action Plan for the Implementation of the National Housing Policy Plan for the Period from 2025 to 2027 https://mpgi.gov.hr/UserDocsImages/dokumenti/NPSP/2025_03_26_Akcijski_plan_NPSP.pdf.
[7] Zgradonačelnik. 2025. Kako do prvog doma: Sve opcije stambene politike za mlade do 45 godina https://www.zgradonacelnik.hr/savjeti/kako-do-prvog-doma-sve-opcije-stambene-politike-za-mlade-do-45-godina/1958.
[8] Ministry of Physical Planning, Construction and State Assets of the Republic of Croatia. 2025. Sabor donio Zakon o društveno poticanoj stanogradnji: Potpore mlađima od 45 godina