The end of the austerity period signals a recovery of the Czech real estate market in 2023, suggesting a return to normalcy after a sharp decline in the second half of 2022. Sales of both older and new apartments have seen significant growth. For new-builds, one was almost double and for older flats, the increase was 49 per cent. Experts from the Czech Banking Association point out that the high year-on-year figures are the result of a comeback from extremely low market activity in the previous period.
The growth in the real estate market was supported by the gradual recovery of the mortgage market last year. The easing of rules and a slight decline in house prices and mortgage rates have contributed to a return to activity similar to the end of 2020. The drop in demand in the previous year caused prices of older homes to fall by seven per cent, but they have only fallen by 4.4 per cent in the final quarter of 2023.
Prices for new construction nationwide fell by only 0.1 percent in 2023. Developers have kept prices down with various incentives, such as garage parking or extra kitchens, and subsidised mortgage loans. The reduction in house prices has slightly eased the gap between prices and household incomes, but the Czech Republic remains at the top of international comparisons of housing unaffordability.
The Housing Affordability Index showed that unaffordability on mortgage credit has increased by 112 per cent since March 2020. The data shows that Prague and the Ústí region are the worst affected, where affordability has worsened by 71 and 144.8 percent respectively. The cheapening of mortgages in recent weeks has led to rising affordability of owner-occupied housing, but banks are worried about a sharp drop in interest rates that could cause mass refinancing of existing loans.
Banks have started to cut interest rates since the beginning of the year, following a decision by the Czech National Bank's Bank Board. According to experts, the reduction in interest rates should contribute to a gradual increase in housing affordability. However, banks fear a rapid and sharp fall in rates, which would lead to a mass refinancing of loans, and are therefore taking a conservative approach to cheapening loans.
Source:
https://www.seznamzpravy.cz/clanek/ekonomika-byznys-reality-konec-setreni-v-cesku-se-opet-zacaly-nakupovat-nemovitosti-246282
https://www.seznamzpravy.cz/clanek/ekonomika-byznys-reality-hypoteka-index-dostupnosti-bytu-151245
https://www.seznamzpravy.cz/clanek/ekonomika-byznys-reality-hypoteka-hypoteky-zacinaji-pomalu-zlevnovat-bankam-se-do-prudkych-zmen-nechce-245910
