The property market in 2022
For us, the property market in 2022 was full of surprises. Prices reached historic highs, investment stalled and the number of people interested in buying their own home declined. Rising prices cannot be blamed for everything; high interest rates and strict mortgage eligibility criteria also played their part.
Why are property prices currently rising?
In 2020 and 2021, new flat construction lagged behind, building material prices rose and mortgages remained relatively affordable. At the same time, people were convinced that investing in property continued to be relatively safe. This resulted in record year-on-year growth in property prices.
However, the Czech National Bank (ČNB) intervened, repeatedly raising the base interest rate, which pushed up mortgage costs. As a result, property became unaffordable for many people and the trend in property prices changed.
Will property prices fall in 2023?
We are already seeing price declines for certain types of property. The most significant falls can be seen in pre-owned flats and recreational properties. By contrast, new-build prices are not expected to go anywhere, and no price reductions are anticipated. The reason is increased construction costs (materials + labour). Simply put, developers cannot afford to lower prices. They are therefore trying to attract buyers with various incentives, such as a parking space or some furnishings free of charge.
How will the property market develop?
And what further developments are expected in the property market? According to forecasts, prices should continue to fall, though not significantly. This is worth bearing in mind, especially if you are planning to sell. It is important to remember that property prices are falling and the buying process is taking longer. When selling, a well-chosen strategy, excellent presentation and correctly set price will therefore be key. For investors, on the other hand, this may represent a great opportunity. Naturally, it depends on the location. Flats in northern Bohemia have seen the greatest price reductions, although appreciation there is also lower, and every buyer should take this into account. When buying a flat to let, it is necessary to choose an effective strategy from the outset. In short, this means buying well and letting the flat as soon as possible.