The main goal of this paper is to determine the influence of foreigners on the real estate market on the island of Pag. We are all aware that with the arrival of foreigners in Croatia there is an influence of foreigners on the real estate market, the real question would be how big is the influence of foreigners on the entire real estate market. The island of Pag is one of the largest islands in Croatia and is one of the islands that have undergone the biggest changes with increase in tourist activity on the Adriatic coast. The main tourist attraction and strenght of the island located in northern Dalmatia not far from zadar is the most famous Croatian beach Zrće. The Zrće beach has raised tourism to a higher level and Novalja has become one of the centres during the summer season. For this reason, there is an increase in the number of arrivals and overnight stays of foreigners. The increased number of foreigners during the summer season is reflected in real estate market on the islands. The increase in demand in the limited island spatial area has led to an increase in real estate prices and an increased number of transactions. The rise in real estate prices is also reflected in the affordability of housing, so it is much harder for the local population to own a flat or an apartment than for someone who lives in a part of Croatia where there is no tourist activity. In recent years, the local population has seen an opportunity to earn money by renting their flats/apartments or family houses, and there has been an increase in the number of renters.