Those interested in buying a flat have reason to cheer. In the first quarter of this year, real estate prices have fallen by 3% since the last quarter of 2008. According to the Czech Statistical Office, prices have dropped even compared to the prices in the first quarter of 2005.
Buyers looking outside of Prague will get even better deals, as prices outside the capital have fallen on average by 5%. In Prague it’s by an average of 1%.
According to King Sturge analyst Ondřej Novotný, this trend will most likely continue. “The prices of new flats will probably stagnate, and when it comes to older flats, we are expecting an up to 10% decline,” he said.
The economic crisis and the resulting cooling of the real estate market is responsible for the falling prices. Czechs fear their incomes will fall and so are putting off making bigger investments. In order to be able to sell a flat, its owner must now be willing to reduce the price.
According to developers, the current demand for new flats has fallen by half year on year. Builders are trying to revive the market through various special offers and bonuses.
The company Finep, for example, is offering some flats at more than half-million-crown discounts. Ekospol is also reducing prices by nearly CZK 500,000. Central Group is throwing in a car when someone busy a flat, and Skanska Reality is trying to attract clients by letting them live in the flat for free for one year.
A March report released by Deloitte and Hyposervis predicted an even more dramatic decline in prices. According to the analysis, the prices of older flats could fall by up to 10% year on year.
The report predicated an even greater fall when it comes to the prices of flats in pre-fab houses – an up to 30% drop. The prices of new flats could fall by 5% to 15%, the report said.
If you compare the current flat prices with prices in 2005, however, housing today is still significantly more expensive now. In Prague, housing costs on average 52.1% more than in 2005. Outside of Prague, prices rose by an average of 77.3%.
