Investors are rubbing their hands: fewer prospective owner-occupiers play into their hands

Over the past ten years, flat prices have risen by more than one hundred per cent, with family houses and building plots following the same trend. There has been talk for some time of dynamic changes in the property market, and they are now becoming visible. This is more than apparent from quarterly analyses by real estate companies and forecasts by property experts.

“This year, I expect stagnation. The reasons are clear: high inflation, expensive mortgages and the caution of people who are naturally waiting to see how the market develops further. We have registered lower demand, with fewer prospective buyers attending property viewings – so owners selling a property are no longer raising their prices. People are starting to save more and think more carefully. Nevertheless, I would be cautious about expecting a sharp fall in prices. Betting on all properties becoming significantly cheaper in every location may not pay off. So far, we have observed price reductions only in certain regions and in properties with some drawback or handicap,” says David Novotný, owner and managing director of Bohemian Estates real estate company. Such a handicap may include, for example, a building or flat’s high energy consumption, a poor location, or construction and technical shortcomings or even defects. Price falls are therefore evident in the “cheapest” regions of the Czech Republic. Studio flats and 2+1 flats in good locations in larger cities or Prague are still selling like hot cakes.

Anyone who does not have the funds to purchase their own home, or cannot afford to keep it under the current circumstances, must rent. However, greater interest in rental housing will inevitably be reflected in prices, which are already beginning to rise. Prime locations can therefore expect modest price growth. The number of people interested in viewing flats is rising across the Czech Republic, and asking rents are increasing almost immediately in response. “Rent rises are expected, yet their pace is beginning to surprise us. This is influenced not only by increased demand from those unable to afford their own home, but also, for example, by the arrival of people from Ukraine and record inflation, which is leading property owners to raise rents. In Prague, we can also see a new tourism boom and the related recovery in the short-term rental market. All of this affects rental housing pricing,” says David Novotný of Bohemian Estates.

Prices will begin to rise especially in the second half of the year, when demand for rental housing will also be fuelled by university students returning to university cities. By the end of the year, tens of thousands of households may enter the rental market for the first time, while tens of thousands more will be seeking new options because of rising costs.