Property prices have begun to fall. Will next year favour flat purchases?
While last year was marked by demand exceeding supply and record sales of flats and houses, this year has brought a new trend—a gradual fall in market prices. Falling prices may revive interest in buying property to such an extent that next year could, after a long time, become a year of opportunities to purchase a flat or house at a favourable price, whether as an investment or for private use. We expect a number of attractive properties to come onto the market next year, says David Novotný of Bohemian Estates.
After last year’s record performance, interest in property froze, significantly changing the market situation. Developers felt the impact too and began competing for potential buyers with a range of above-standard benefits.
“The number of potential buyers has fallen significantly, and this has had a noticeable impact on development companies. The situation resulted from high interest rates, stricter conditions for obtaining mortgage finance and property prices that remain at record highs. Statistics show that in the first half of the year, Prague—traditionally the city with the most construction in the country—sold fully half as many flats as last year. Developers therefore sought alternative ways of reaching prospective buyers whose interest had stalled. They are targeting those who can still afford to buy their own home under current conditions,” explains David Novotný, owner and managing director of the real estate company Bohemian Estates. Discounts, accompanying benefits and various special offers have therefore become an integral part of the sales strategy of most established development companies.
Common benefits offered by developers include a so-called guaranteed mortgage, where the property seller can guarantee the client an interest rate of approximately three percent for around two years. However, the client must demonstrate sufficient income to qualify for a mortgage at the current interest rates, which are almost double that figure. There are still few people who meet this requirement. Other popular offers include, for example, a guarantee of a refund by the flat completion date in return for paying approximately ten percent of the deposit. Offers of kitchen fittings or kitchen accessories are not uncommon either.
Will next year stir the stagnant waters of the property market?
According to property experts, it is better to wait before buying this year, but what will next year bring? “We expect a number of interesting properties to come onto the market in 2023. It will pay to monitor the situation, keep your eyes peeled and be ready to act decisively at the right moment. Next year will offer the most interesting property opportunities of the past ten years,” says David Novotný of Bohemian Estates, looking ahead. However, experts warn that the decline may not last long – those who are prepared will not be caught off guard and will benefit most from favourable market conditions.
There will certainly be more opportunities to buy advantageously than this year. However, it does not pay to delay and expect conditions to improve further. Speed will therefore be crucial, given the high volatility of the property market. Demand may recover very quickly, while in the longer term property market prices may continue to rise, even if growth will not be dramatic and will alternate with periods of falling prices.