How do cost of utilities in Croatia compare with rest of the EU

Zagreb

The affordability of housing and high rental prices continue to be a pressing issue, particularly in tourist-oriented countries.

In Croatia, this is further influenced by the increasing demand from foreign workers and expatriates.

Inflation accelerated in January, mainly due to rising energy costs. In December, energy prices increased by 2.4% annually, but in January, the growth rate jumped to 5.3%, Poslovni dnevnik reports.

This surge is primarily attributed to higher electricity and fuel prices, with increased grid fees of 12% coming into effect at the start of the year.

As a result, household electricity bills are expected to rise by 3.7% annually, with an overall increase of around 10% since the first wave of price hikes in November. Despite this, electricity prices in Croatia remain among the lowest in the European Union.

Currently, reduced VAT rates of 5% still apply to gas, heating, firewood, pellets, briquettes, and wood chips. However, it remains uncertain whether the government will extend this temporary measure beyond March or if household costs will rise further.

Croatia Below EU Average for Housing Costs

Compared to other EU countries, Croatia’s utility bills are below average, contributing to lower overall housing costs, Poslovni dnevnik writes.

According to Eurostat, in 2023, EU households allocated nearly 20% of their disposable income to housing and utilities, while in Croatia, this figure was significantly lower at 14.4%.

One key factor behind this difference is home ownership. In Croatia, over 92% of households own their homes, reducing monthly housing expenses compared to countries with higher rental rates.

Housing costs typically include expenses for utilities such as water, electricity, gas, heating, maintenance, and associated service fees. Homeowners also account for mortgage interest payments, while renters face rental fees.

However, since Croatia has a high rate of home ownership, expensive rental prices do not impact the statistics as much as in other EU countries.

Big Differences Across the EU

Housing costs vary significantly across Europe. In Cyprus, for example, only 11.6% of disposable income goes towards housing, while in Germany, Denmark, and Norway, this figure exceeds 25%. In Greece, it is even higher, surpassing 35% due to specific economic conditions.

While Croatia has relatively low housing costs, the situation is different when it comes to food and non-alcoholic beverages, where Croatian households spend a larger share of their income compared to the EU average.

Expensive Rent

For those renting, the situation is more challenging. Housing affordability and high rents are particularly pressing in tourist-driven economies, and Croatia is no exception. The demand from foreign workers and expatriates has further driven up rental prices, making it difficult for lower-income households to afford housing.

Housing costs have gradually increased over the past few years in the EU. However, Croatia has remained largely unaffected by this trend due to its high home ownership rate, keeping overall housing costs lower than in many other EU nations.