In the previous quarters, the price of real estate on the Czech market stagnated or even declined in many regions. In the last few weeks, however, the trend has been slightly different, with prices rising again in the capital and its wider surroundings, while in South Moravia they are falling. When is the best time to start selling property? What are the assumptions of the market development?
The energy crisis and the war in the Ukraine were the main factors that shook the property market, but during the summer holidays a reversal took place and the decline in prices in the capital stopped, as recent analyses by the real estate group European Housing Services (EHS) show.
In the summer months, the average price of older flats climbed to CZK 117,000 per square metre, while properties of the same standard were last sold for that amount a year ago. The price turbulence caused by the crisis seems to be calming down. As for family houses, the price has risen to an even higher amount than a year ago, to CZK 98,000 per square metre.
How are the other regions in the Czech Republic doing?
Prague is an attractive city, which is described as a cultural, financial, transport and economic hub, so it is not surprising that there is renewed interest in real estate in the metropolis, which has caused prices to rise. In other regions, the scenario is not so rosy. The Central Bohemian Region (especially towns such as Kladno, Beroun, Mladá Boleslav, Benešov, Kolín, Příbram and Mělník) is doing very well, as the price per square metre is around CZK 80,000.
In the Zlín Region, property prices are also rising, and family houses and flats are selling for more than before the crisis. The same is true in the Pilsen, Liberec and Hradec Králové regions.
The contrast to the above-mentioned regions is South Moravia, where prices of flats are still below last year's level. At the beginning of the summer period, the average price of an apartment was around 80.5 thousand per square metre, while a year ago it was 15% higher. Interestingly, the situation is a bit different for family houses, because in the Brno area, for example, their prices are returning to the prices before the crisis.
Do you want to sell the property? Then it's high time
In the past year, sales were mainly of properties that their owners needed to sell urgently (for example, properties from inheritance, after divorce, etc.). Often these were not sales for profit.
If you are planning to sell a property, you do not have to wait any longer, as prices are getting back to the level they were before the crisis. You can sell again at attractive prices.
Real estate price development in 2023
A number of economic indicators
enter into the development of real estate prices, especially demand and supply on the real estate market. Demand is influenced by factors such as the number of inhabitants, the availability of mortgage loans and average wages, as well as the current state of the economy. When property buyers are uncertain, they prefer to invest.
Real estate supply and demand
The price of real estate is also subject to how much current supply and demand there is. In the capital, property prices do not seem to be falling because there is a real shortage of property. The situation in Prague is also similar to that in Brno and other large cities. The reason for such a shortage is the problem with the construction of new buildings, for which it is necessary to deal with a lot of paperwork. So bureaucracy is behind everything.
In the long term, demand in regional cities is high, but there may be smaller, but short-term fluctuations.
Interest rates
Of course, we must not forget the mortgage market, which is intertwined with the real estate market. Mortgages are almost unaffordable for the younger generation, which has an impact on the development of property prices. During 2022, the smallest number of mortgage loans were applied for in the last twenty years, with the cause being a significant increase in interest rates to almost double.
Interest rates have been rising since 2021, but not as significantly. While rates were at 1.91% in February 2021, they stalled at 6.3% in July 2022.
Interest rates increased for one-year fixations up to 80% LTV
The high increase in interest rates was mainly in mortgage loans with interest rate fixation for one year. Whereas for ten-year fixings, interest rates were slightly lower but still often unfavourable. The question remains, however, whether interest rates will ever return to former lows such as 1.91%.
The CNB is trying to keep rates stable
The Czech National Bank no longer wants to push interest rates higher and therefore has not made any significant changes in recent months; in some months there was even a slight decline, but not a large one. The Czech National Bank is in no hurry to cut interest rates, as Jiří Sýkora said: "According to current forecasts, mortgage rates for this year should show stagnation accompanied by only slight fluctuations caused by the competitive struggle of individual banking institutions. This will continue until the CNB starts to cut interest rates. This cannot be expected before the end of this year. With optimistic forecasts, mortgage interest rates could start to fall at the end of this year, and with more pessimistic forecasts we could see a fall as late as the spring of 2024. However, this will be a fall in the low tenths of a per cent."
So if you own property or are planning to buy some, then the above lines have given you all the information you need. For sellers, the boom is on again as they can get interesting amounts for their properties and thus make a profit. Buyers should again hurry up to buy a property before the prices get even higher.
Soudce:
https://www.maxima.cz/blog/ceny-nemovitosti-proc-rostou-a-jak-se-budou-vyvijet/
