If the country’s economy keeps doing well the Czech property market should grow by 10 percent by the end of this year with expansion slowing to 7.5 percent in 2018. That is according to a study by the Association for Real Estate Market Development quoted by the news website iHned.cz
The price of apartments in the Czech Republic is growing sharply, with Prague and Brno registering the fastest increases, iHned.cz said. The main reasons for the trend are record low mortgage rates, which have spurred a spike in demand and a knock-on price surge.
One section of the Association for Real Estate Market Development’s recently published report was written by experts from the Czech National Bank. They are the ones who have produced the estimate of 10 percent growth by the end of 2017 and slower growth of 7.5 percent next year.
The experts write that legislative changes affecting housing loans and the tightening of the central bank’s recommendations with regard to mortgage lending should continue to moderate the rate at which property prices rise.
In Prague, the price of apartments has already surpassed the rates seen in 2008, prior to the financial crisis, iHned.cz said.
However, it is a different story outside the capital, with prices remaining at 2 percent to 10 percent beneath their 2008 levels, according to the Czech National Bank.
The Association for Real Estate Market Development based its tenth annual report of this type on a survey of 70 leading experts in the Czech property field.
New apartments in Prague saw double-digit price growth in 2016. The average price per metre of properties in the capital advertised by developers (in many case off-plan) is over CZK 75,000 on average.
High demand is also pushing up the price of flats in older and relatively poor quality buildings.
Jan Řežáb of developers JRD told iHned.cz that absurd extremes were occurring with apartments in prefabricated “panel” buildings sometimes going for more than brand new ones.
Milan Roček of market analysts cenovamapa.org said that the price per metre of “panel” apartments sometimes grew faster than the average; on the other hand, it also falls more quickly when the market undergoes a downturn, he told iHned.cz.
According to demographic prognoses, Prague’s population should grow by 93,000 by 2030, meaning 82,400 new apartments will be needed. To meet that demand 5,500 new ones would need to be completed at year. However, on average fewer than 4,300 were finished in the last few years.
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