The stagnation of the Real Estate market last year manifested itself mainly in property sales, not only in new buildings but also in older properties. The ČBA and Dataligence report up to a 50% drop in Real Estate market activity and an average 4% decline in property prices. Their analysis shows that the freezing of the market has caused the lowest number of sales in the last decade, with older flats falling by up to 51%, detached houses by 49% and new flats falling by up to 57%, but property prices falling more slowly.
Having reached the peak of house prices across most of the country, the second half of 2022 was a modest decline in prices, with older flats falling by an average of 4.3%. In Prague, it was only 1%. For new builds, on the other hand, the average price of sold properties increased by up to 11% (CZK 120,000 / 1m2), despite various discount offers and marketing promotions. In Prague, the average price per square meter rose to CZK 151,643. The fastest growth in property prices over the last ten years was recorded in the Czech Republic, right after Hungary and Estonia.
The market freeze was caused not only by high property prices, but also by high mortgage rates, resulting in the fewest mortgages granted since January 2014. The volume of actual new mortgages granted without refinancing reached CZK 5.4 billion in January. The ČBA article cites an increase of approximately CZK 2,000 per month for the repayment of a million-dollar mortgage. The average monthly repayment for a CZK 3 million mortgage increased by approximately CZK 6 000.
The interest rate fell in December for the first time in two years for newly granted mortgages, from 5.98% to 5.93%. The current situation will persist in the first half of this year, but after that the development could be significantly more positive. The mortgage rate could fall to an optimal 3% during 2024 says Remax CEO Jan Hrubý in an E15 article.
The situation we are in now points to a reality we may have to accept in the future. Not every Czech will be able to have their own housing. The imaginary scissors are opening up between the rich who can afford to buy property and those who will have to settle for rented accommodation. We are slowly following the trend in Western countries where this form of housing is quite common. Slovakia, Hungary, Bulgaria and Romania are doing the same.
If you are looking for a new home, RealLocate can offer you not only rental housing in BTR projects, with which we mostly cooperate, but also properties for sale, which we are planning a whole range in the future in cooperation with many developers. All of our projects can be found on our website www.reallocate.cz.
Source: Česká bankovní asociace, Asociace nájemního bydlení a E15.
