Will the property prices go down in 2019?
Updated: Mar 20
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Recently I’ve been to the REMAX convention where an expert from a consulting company was naming the factors for the huge raises of the prices for the apartments in Czech Republic within last several years. He mentioned several factors.
One of them was a relocation of people from the poorer part of the country to the big cities. There is also a large wave of foreign specialists – because Czech republic has very low unemployment rate - for the big cities it is between 1.5 and 2.5 % only, hence a lot of working places are attracting a lot of specialists.
Another factor was demographical changes: Czech Republic in the second world war was not really damaged by the war as much as other countries, there was a baby boom after the second world war. My generation between 35-45 years old now, we’re the children of baby boomers. At the time the government did not react to the increased demand for the houses.
Another reason mentioned was our new life style: one hundred years ago an average family was numerous and families needed much more space to live in. Now the families are very small. In fact the divorce rate now is very high (> 50%), people now need a larger quantity of apartments, rather than large spaces to live in.
But the main reason is that the new houses are built very slowly due to complicated and long approval process. Currently in Czech Republic an average time to approve a construction of an apartment house is 9.5 years.
According to the current demand Prague should construct 6000 apartments a year, while it is only 4.5 thousand are being constructed at the moment. This creates a long term deficit of the new houses and pushes the prices for the new houses up.
There is another interesting but sad statistics coming from the European Union. According to the European union data an average Czech person should work 11.3 years in order to buy an apartment in the new building while for example an average Belgian person should work only 3.7 years.
The summary? The expert mentioned that even there were some changes to the mortgages he believes it won’t influence the prices for the apartments so much and that the prices will still grow for the next 2 years.