The myth of continuous growth: Why some coastal properties remain on the market for years without price adjustment

Public discourse continues to be dominated by the narrative of uninterrupted price growth along the Croatian coast. At the same time, however, a different phenomenon is increasingly visible on the ground: a portion of properties, particularly within the second-home segment, remains on the market for two, three, or more years without any meaningful price adjustment.

In certain micro-locations, the gap between asking and achieved prices exceeds double-digit percentages. Yet price corrections occur slowly and selectively. This raises a legitimate question: is the market determining the price, or is it being determined by the seller’s patience?

In parts of the coast today, we are not witnessing a classic market correction, but rather an extended phase of price rigidity.

Price as conviction

Within the holiday property segment, the assumption that investment alone generates value growth is deeply embedded. The argument that “capital invested must be returned with profit” often overrides a realistic assessment of market absorption.

However, the market does not validate the amount of capital invested; it validates the alignment of the product with demand. During periods of strong growth, these differences were less visible, as the market absorbed even projects that were not optimally positioned. In a phase of stabilization, the gap becomes evident.

When a property remains on the market for years without price adjustment, this is not a sign of market strength. It is a sign that price no longer functions as a market signal.

A fiscal framework that softens pressure

A relatively favorable tax treatment of short-term tourist rentals enables owners to generate income without the need to sell. A property can simultaneously operate as a rental asset while remaining listed for sale.

Such a model reduces the liquidity pressure that, under different circumstances, would lead to faster price adjustments. The result is a market with a high number of formally active but only partially motivated sellers.

The market may appear stable, yet that stability partly derives from tolerance of illiquidity rather than from genuine equilibrium between supply and demand.

The lack of clear reference points

An additional challenge lies in the limited transparency of completed transactions. Asking prices often become reference points, even though they do not reflect achieved values.

Without clear and accessible data, price easily becomes a projection of expectations rather than a confirmed outcome of market validation.

In such an environment, the market corrects mispricing more slowly, and periods of stagnation tend to extend.

Capital discipline

Unlike markets dominated by institutional developers operating with bank financing and defined exit timelines, a significant portion of Croatia’s second-home supply comes from investors without pronounced credit pressure.

When there is no defined timeline or financial obligation requiring realization, price adjustment becomes a matter of choice rather than necessity.

Such a structure reduces capital discipline and slows market corrections.

What this means

None of the above implies that the market is in crisis. It does, however, suggest that the narrative of linear growth does not fully reflect reality.

A mature market is not one in which prices rise continuously, but one in which value is confirmed through transaction.

As long as the asking price remains a declaration rather than the result of market verification, the gap between perception and market value will persist.

The market becomes truly stable only when price once again functions as a signal not a belief.

Author: Ivan Kovačić
Remington Real Estate