Record high price of property in Prague expected to further accelerate

Real Estate is not immune to sudden and critical changes. With the drastic financial challenges that the pandemic brought for many people, it is understandable why many have uncertainty surrounding the future of the housing market.

However, despite the current climate, it seems many experts in the industry are predicting the same future trends. The stable increase we have been seeing since 2012 (almost 10 years) in the Czech Republic is expected to continue, and we shouldn’t expect any major shifts.

So, let's examine the future projections for Prague real-estate.

It seems the longest rise in apartment prices in Czech history is not set to stop. Slow down at the very most, yes - but the increase is here to stay.

Looking for parallels to the housing situation after the global financial crisis and the mortgage market crisis back in 2008 where there was rapid fall in property prices, many people predicted a similar situation after the pandemic. However, this has not happened- nor, do experts expect it to.

After 2008, the fall in real estate prices was caused mainly by two factors. Stoppage of real estate financing by banks and a sharp increase in unemployment. The problem was therefore on the low demand side.

But now, according to CzechRoof, a business which has extensive and outstanding knowledge of the real estate market in the capital, the situation is the opposite.

“There is a long-lasting very low percentage of new building permits issued in relation to demand, and there is a current sharp increase in interest rates by the Czech National Bank,” explained a spokesperson for CzechRoof, who provide advantages in finding property in the capitals fast-growing market.

“This maintains zero interest rates in the Eurozone, which will lead to an increase in demand for Czech real estate from foreign buyers.”

For this reason, the once anticipated fall of housing prices is not predicted anymore.

Others believe this could be down to the tensions on the market increasing as the supply of new and existing property remains limited.

"We expect prices to rise further because there are no reasons for their decline,” explained Central Group analyst Ondřej Šťastný.

“Unfortunately, there is a long-term shortage of flats on the market and the demand for housing, also due to the protection of money against inflation, is at a record high. The number of flats sold in Prague in the first half of this year is twice as high as in the same period last year.”

Šťastný does predict, however, that price growth may slow down with rising mortgage interest rates.

He also added that the rise in prices could also slow down if there is a sharp increase of new property put on the market. However, due to the way construction is permitted here, he doubts this will happen in the foreseeable future to flatten the acceleration of prices.

Prices are rising, faster than ever before- and with the appetite for housing in the city so large, until the demand is satisfied, it seems we can continue to predict further growth, and more broken real estate records.