I don’t know anyone in Croatia with a mortgage – but a dozen with second homes – the Croatian property conundrum

“I have met more locals with second homes, or weekend houses, than mortgages,” joked a foreigner as we sipped cappuccino in the April sunshine. She had said it with a smile on her face, but there was more truth in what she had said than humour.

She was from New York and really had that 24 hours a day 7 days a week spirit. She had come from life in the extreme fast lane of the Big Apple to the tortoise slow lane of the southern Adriatic. But that sentence got my thinking.

I started to add up the people who I know in Dubrovnik with a mortgage. Zero.

And the number I know with weekend or second homes. A dozen (at least).

She wasn’t wrong.

Holiday home with a view – Photo – Canva 

It was something that hadn’t really crossed my mind before, but sometimes it takes fresh eyes to see through the fog.

I then flipped it across the English Channel. In the UK the people who I know with a mortgage. Ten. The people I know with a second or weekend home. Zero.

A rather unexpected result, but true.

Almost 20 percent of Croatians have second homes 

But why? How is this possible?

The vast majority of second home owners in the UK have them as a form of income. Only roughly 5 percent of people on the island have a second home, and almost 70 percent rent them out for a second income.

According to data from 2017 around 17 percent of Croatians have second homes. That’s over three times more than the Brits.

I dug deeper. And found a pattern. “One in six Europeans owns a second home, but the prevalence of second-home ownership varies significantly by country, with low rates of ownership in some of Europe’s richest countries like Germany,” stated one financial publication.

By far (and by some way) the country with the largest second home ownership in Europe is Greece. Incredibly, over 32 percent of Greeks own holiday homes.

Handed down from generation to generation – Photo – Canva

Circling back to Croatia I uncovered a statistic that backed up this theory and the reason for the lack of mortgages. In a report by the European Union about home ownership a massive 90 percent of Croatians own their own homes. In fact, this puts Croatia in third place in all of the EU. And which country was on the bottom of the list. Germany.

The deeper I investigated the more the opening sentence of my US friend was correct.

Less than 10 percent of Croatians have a mortgage 

Only 9 percent of Croatian have household loans (mortgages) whilst over 37 percent of Brits have the same loans.

So basically 9 percent of Croatians have mortgages and 17 percent have second homes.

So, she was right. You have almost twice the chance of meeting somewhere with a weekend home as having a mortgage.

In the US, where my friend sipping coffee with me was from, only around 2 percent of people own second homes. And these tend to be the mega-rich. And over 64 percent of homeowners have a mortgage.

Could this be because it is much easier to get housing credit in the US, UK and Germany? Well, that’s possibly one factor. But a much, much more important one is, so-called, housing inheritance. One of my good friends in the UK bought his house from his grandmother! Yes, from his own grandmother. “If that happened in Croatia your grandmother would be in court for mistreatment,” joked my wife with them.

I clearly remember two sisters that we met on our recent two-month break in England. They had just bought a small house, again off their grandmother. “She was so kind and gave us a couple of thousand pounds discount so that we could buy a fridge, cooker and couch,” they said. This isn’t housing inheritance.

Both of these cases seem so odd for every local here that I have told that they simply don’t believe me. And both of these cases took mortgages to buy the properties.

Could Croatia be a case of “house-rich, cash-poor.” Possibly. However, this phrase is usually used with people with one home, not a second holiday home that could be rented out to tourists.

“Now, I come to think of it, you are right,” I answered my friend. And I did think about it a lot, as you can see.

Read more Englishman in Dubrovnik…well, if you really want to

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About the author
Mark Thomas (aka Englez u Dubrovniku) is the editor of The Dubrovnik Times. He was born and educated in the UK and moved to live in Dubrovnik in 1998. He works across a whole range of media, from a daily radio show to TV and in print. Thomas is fluent in Croatian and this column is available in Croatia on the website – Dubrovnik Vjesnik