What will the housing market situation look like in Prague in 2009, as the global financial crisis continues wreaking havoc across Europe? According to experts, demand for new flats will continue, but at lower levels, closer to the demand in 2005 and 2006, Hospodářské noviny wrote in an overview of the residential market earlier this month.
A full quarter of all Prague area households are considering buying a new flat or house in the capital within the next three years, according to a recent STEM/MARK survey.
Out-of-towners will also help drive demand. According to HN, a growing number of Czechs are buying Prague flats as a second home and, above all, as an investment.
Finally, with foreigners able to legally buy residential property in the Czech Republic starting next May, the residential market should receive a further boost in the second half of 2009. Up until now non-EU residents were only able to buy real estate through a company.
Part of the reason that demand will remain strong is due to the low quality of a large segment of the available residential property. Roughly 30% of all flats in the country are in poorly-built, aging panel houses, HN reports. Many of their owners and tenants are ready for something better.
The steady demand should drive up the prices of new flats by 5 to 10% – at least in desirable locations in Prague, according to the developer Central Group. The prices of older flats, meanwhile, could actually see a drop, in some cases by as much as by 20%. According to Central Group head Dušan Kunovský, at a time of financial crisis many see buying a new flat as the safest investment. Kunovský told HN his company is investing more money in real estate than ever before.
One area where the crisis will significantly hamper the housing market, of course, will be the financing of development projects through credit loans, since banks are making loans harder to obtain.
Kristina Alda can be reached at [email protected]