After years of decline, the Czech Republic’s real estate market is experiencing a boom. Prices of apartments in the Czech Republic are currently being sold for the highest price within the last five years, the daily e15 reported on Wednesday.
At the end of last year, the average price of an apartment in the Czech Republic equalled around 100 average Czech monthly wages. However, despite the higher prices, demand keeps growing. The number of apartments sold in 2015 has even exceeded the demand before the financial crisis in 2008.
According to analysts, the growing demand is fuelled primarily by cheap mortgages. At the moment, Czechs pay around a fifth less to pay off a mortgage than they did about five years ago.
Re/Max real estate agent Jan Zachystal told the daily that the demand for apartments in Prague was currently very high, adding that the most interesting offers were sold within just a few days. While a few years ago, customers would make around 10 visits before choosing an apartment, now it is usually less than half that total, he said.
The highest prices for apartments were set in the spring 2008, when an apartment would cost approximately 134 average monthly wages, while in the winter of 2013 and during the downturn in the market they would have needed only 94 wages.
Analysts are warning that apartments are now becoming less affordable in comparison with people’s salaries. While last summer mortgage repayments represented 76 percent of an average monthly salary, at the end of last year it was already up to 78 percent.
According to the most recent data of the Czech Statistical Office, during last summer and autumn, the market price of newly constructed apartments increased the fastest since 2009, by 5.5 percent. The prices of older apartments have increased by approximately the same speed.
The rising demand is also reflected in the business results of real estate agencies. For instance the Re/Max agency increased its income by 26 percent last year to 543 million crowns.
According to a study carried out earlier this year by the Lexxus Norton agency, the prices of luxury apartments in Prague are expected to grow steadily until 2018 by about 12 to 15 percent. The demand for luxury apartments in the Czech capital have over the long-term exceeded the offer. People are now mostly searching for smaller apartments located in the centre of Prague.