Czech property price rises slow – but not in Prague

The rise in apartment prices in the Czech Republic, which has been extremely rapid in recent years, has come to a halt or at least decelerated, due to Czechs reaching the limits of their purchasing power as well as new mortgage regulations, iDnes.cz reported. However, things are rather different in Prague, the news site said.

Photo: Michaela Vydrová / Czech RadioPhoto: Michaela Vydrová / Czech Radio Petr Makovský of iDnes.cz’s own real estate section said the rise in property prices had hit a ceiling at nationwide level as prices were growing faster than salaries.

Large cities in particular have been reporting record apartment prices for some time. But in Brno, for instance, this has slowed markedly in the last few months. Alexej Veselý of the company Trikaya said all signs were that prices would cease increasing soon.

Stagnation or even a fall in apartment prices has been see in a number of parts of the country, such as the Moravia-Silesian, Olomouc, Vysočina, Zlín and Ústí regions.

While the story is not quite the same in the relatively rich Prague, price increases have slowed year-on-year in the last few months, iDnes.cz said.

Prices in the capital rose by 15.5 percent between July and September this year, while last year they grew by 24 percent in the same period, according to data from a number of developers cited by iDnes.cz

The average cost of a new flat in Prague has now passed the CZK 100,000 a square metre mark and prices are expected to continue getting higher in the city.

Central Group’s executive director Michaela Tomášková told iDnes.cz that the price was a reflection of the present limited offer of new projects. On top of this new mortgage rules set by the Czech National Bank have led to an estimated one-third fall in applications, she said.

Those changes, brought in in October, are making themselves increasingly felt. Pavel Hassman of estate agents Re/Max 4You said that whereas his firm was previously seeing an average of seven potential buyers per property that number has now fallen to three.

Bidli reality chief Ondřej Mašín said some people had evidently been hoping the central bank’s new regulations would cause a decline in prices – but this is not yet the case in the majority of localities.

For his part Milan Roček of the website CenováMapa.org, which monitors prices, told iDnes.cz that the CNB’s measures artificially restricted demand, which should cause a fall in prices.

However, the strength of the economy has prevented that from happening; there is no pressure on the market, so there is no willingness or need to sell at a reduced price, Mr. Roček said.

That said, he concedes that prices are beginning to stagnate throughout the regions. The head of CenováMapa.org says this is because fewer and fewer apartments are changing hands. Sellers are refusing to lower their demands and buyers are unable to pay more, said Mr. Roček.