Real estate prices, sales, and rentals of apartments in the Czech Republic are constantly rising. Other countries are no exception, but how does the Czech Republic compare to other countries?
The Bloomberg server has also looked into this question and in its analysis has tracked the Real Estate market of 30 OECD (Organization for Economic co-operation and Development) members and candidate countries, ranking them according to how overvalued their properties are.
Five leading indicators were tracked: the ratio of house prices to monthly rents, the price-to-income ratio, real and nominal annual price growth, and annual credit growth. The Czech Republic came second in this analysis. In the overall comparison, New Zealand came first. Hungary came in third.
House prices had increased by 26 percent compared to last year. The figure comes from data analysis company CEIC Data. The gap between the income of the average citizen and property prices in the country is now one of the largest in the European Union, which rightly raises serious concerns about a property bubble.
New Zealand is at the top of this survey, where property prices rose by thirty percent last year. In this case, analysts expect the New Zealand property bubble to burst this year and house prices may fall by some ten percent.
In nineteen OECD member countries, including the Czech Republic, the ratio of rental housing prices to incomes is currently higher than before the 2008 financial crisis. This can only mean one thing - overestimated prices that do not reflect the situation in the economy. At the same time, however, we should not fear the impending scenario of the last crisis, when the bursting of the real estate bubble in the USA was followed by a rapid fall in property prices and subsequent stagnation. Banks have tightened their mortgage conditions and household savings are still strong. Therefore, even this growing situation may not be immediately fatal.
