In Zagreb, the biggest real estate market, the asking prices for real estate in February 2010 were up 0.5 per cent on the month and down 4.1 per cent on the year.

On the coast, prices were 1.2 per cent up on the month and 2.9 per cent down from February 2009.

Commenting on a government-sponsored bill for subsidizing the sale of flats, CentarNekretnina manager Domenico Devescovi said buyers remained in an unenviable position.

Real estate prices will not form the market, since they will not drop due to lower demand but will be artificially maintained on the current level.

On the one hand, buyers will have to borrow from commercial banks and pay off a housing loan over the next 30 years, while on the other, they will owe the government and after a maximum 20-year grace period, they will have to start paying the debt to the government.

CentarNekretnina does not expect dramatic changes on the real estate market given that the economic situation in Croatia is deteriorating. The agency expects turnover to grow only when unemployment growth is curbed, when GDP grows several quarters consecutively, and when the record-high illiquidity starts declining.

The average asking price for a flat in Zagreb in February 2010 was EUR 1,873 per square metre, virtually the same as in January and down 4.5 per cent from February 2009.