Property prices rising in Czechia after period of stagnation
After a period of stagnation, prices of apartments and houses in Czechia are again on the rise, according to players on the property market. But what is driving this development? And what other trends can be observed?
According to a study by the real estate service Bezrealitky.cz, property prices in Czechia are beginning to climb again after a period of stagnation.
In the first quarter of 2024, the average price of older flats went up by 2 percent, while dwelling houses saw a similar rise.
This information is confirmed by Petr Hána, head of financial consulting in real estate and construction at Deloitte.
“The factors that negatively impacted the residential market, last year in particular, have either faded away or eased off somewhat; for instance, the price of energy, which has traditionally influenced people’s attitude to buying property. Other factors are the price of labour in construction, and the fall in inflation.”
After a period of caution, people in Czechia are again displaying more interest in investing, the expert told Czech Radio’s Plus station.
“It is possible to observe a better mood on the market when it comes to buying property, because the price of money has improved a bit, meaning that interest rates have become more attractive again. And we observe a similar trend on the country’s bigger markets, where prices are growing slightly again. But there is still stagnation on less active markets, such as in Ústí nad Labem.”
Bezrealitky.cz has observed a rise in prices of long-existing properties. But Mr. Hána says the same should also apply to new builds.
“Interest is on the increase, particularly in bigger markets – for the very reason that some factors have improved. And in that case Czechs do like to invest in property and that’s a trend that doesn’t ever change much. So I expect a revival in this area, and mild growth.”
And for Czechs seeking to buy-to-rent, small flats remain the most popular choice.
“That’s a long-term trend. In fact we have observed it since the very beginning of modern development projects. Naturally it’s connected to the fact that smaller apartments tend to be cheaper and more affordable to people.”
But while that situation has been in place for some time, there has been a major change in another area, says the Deloitte representative: a gap has developed recently between mortgage and rent payments.
“It used to be the case that monthly mortgage repayments and rents were pretty similar: somewhere between 30 and 40 percent of household disposable income. But in the last two years – in combination with a rise in property prices and a marked jump in mortgage rates – mortgage payments went up sharply. This means that access to property ownership got a lot worse. We really need to differentiate between access to ownership and access to renting, which hasn’t changed much in the last two years.”
