Croatia prepares new affordable rent plan to ease crisis for young families

Rising rents push home ownership out of reach

ZAGREB, 14 July 2025 (Hina) – In response to rapidly rising property prices across the country, the Croatian Ministry of Physical Planning, Construction and State Assets is preparing a set of new measures aimed at ensuring more affordable housing for young families.

One of the key proposals – the Affordable Rent Programme – will soon be opened to public consultation.

While the current scheme allows young people to receive a tax refund through the Agency for Transactions and Mediation in Immovable Properties (APN) when purchasing their first property, it has done little to curb the relentless rise in prices.

The Ministry acknowledges that further action is necessary.

Property Prices Continue to Climb

Over the past three years, property prices in Croatia have increased by an average of 8% annually, with new builds rising even faster at 11% per year.

In April 2025, the average monthly net salary stood at €1,439, while the price per square metre of new-build apartments in Zagreb had reached €3,300, and upwards of €4,500 in more exclusive areas.

Prices in Split have climbed to between €4,500 and €5,500 per square metre, while more affordable options remain in Osijek, where new-build prices range from €1,600 to €2,000 per square metre.

The government believes the solution lies in activating a greater share of the housing stock, particularly properties that are not currently being used for residential purposes.

A major new initiative, the Affordable Rent Programme, is intended for citizens who are not creditworthy and cannot afford to buy a home.

Under the proposal, the state would manage privately owned apartments for long-term affordable rental, paying landlords a fair compensation and offering significantly lower rents to young families.

At the same time, state-owned flats would also be included in the programme and made available for affordable long-term lease.

With high demand for short-term holiday rentals driving up long-term rental prices, the government is also introducing tax policy changes that differentiate between short-term and long-term rental arrangements.

Many landlords are opting for platforms like Airbnb, where short-term lets are more profitable, often at the expense of long-term renters. This has led to a surge in rental prices across Croatian cities.

However, early signs indicate that the policy shift may be working.

According to unofficial data from the Tax Administration, the number of registered long-term rental agreements in Zagreb rose from 14,000 in 2023 to 20,300 in 2024, with another 5,000 contracts reported by mid-March this year.

This increase in available rental properties offers hope that rising rents could stabilise—or even fall.

To further stabilise the housing market, the government plans to construct new residential units through its POS (Subsidised Housing Construction) programme, and in collaboration with local authorities on additional housing initiatives.

Special emphasis will be placed on boosting the housing supply in rural and underdeveloped regions, where new family homes and flats will also be built.

New Housing Law in the Works

Meanwhile, the Ministry is drafting a new Law on Affordable Housing, which will aim to improve lending conditions for those looking to build or buy family homes—particularly in less developed areas.