The construction boom in the Czech Republic occurred in 2007-2009, and in 2007 prices rose rapidly (by almost 25% in real terms). But already in 2008, prices rose by less than 7%, and in 2009 - decreased by 15%.
There is no large surplus of supply in the sector of new buildings in the Czech Republic, and the decline in prices is not caused by a "bubble", but rather by a reduction in demand due to the economic situation in the country and in the world as a whole. Also it was reported that local buyers consider new housing to be overpriced.
In 2011, real estate in the Czech Republic continued to fall in price. According to the Knight Frank global price index, from the second quarter of 2010 to the second quarter of 2011, housing in the Czech Republic fell by 5.2%. Thus, the Czech Republic is still one of the European outsiders in terms of price dynamics.
According to the Czech Internet resource , apartments in the country have fallen in price by 25% in three years. At the same time, positive dynamics has been observed in the most popular areas among foreign investors (for example, in Prague, Karlovy Vary, Mariansky and Frantishkov Lazni) in recent years.
During this period, the cost of real estate in Most, Litvinov-Yanov or Brno decreased, and the price also fell in areas of the Czech Republic, where real estate was cheaper before the crisis.
Most foreign buyers are interested in housing in Prague, in the resorts of Karlovy Vary and Teplice, in major cities of the country. Prices in Prague start from 2000 euros per 1 sq. m, in Karlovy Vary – from 1000-1500 euros, and the prices for luxury properties in Prague and Karlovy Vary are about the same. Some of the lowest prices in the country are in the resort town of Teplice, where prices start from about 400 euros per sq. m.
VAT increase
The situation in the real estate sector is influenced by the fact that the Czech authorities have set a course for VAT increase.
In January 2010, the Czech government raised VAT by 1%, and its lower level was 10%, and the upper level was 20%. The 10% tax is charged on goods such as groceries, medicines and books, as well as on new buildings and services related to housing (water supply, heating). The Czech authorities plan to continue the gradual increase in VAT. First, in 2012, the rate will rise to 14%, and a year later VAT will rise to 17.5%.
As a result, according to analysts, the cost of housing will increase by at least 11% due to the fact that the cost of services, building materials, etc. will also increase.
The support for the real estate market was the reduction of mortgage rates, due to which the market has been reviving since the end of 2010. So in January 2011, the average mortgage rate was 4.53%.
Rent
As for the level of income from renting out housing, now it is comparable to cities such as Berlin or Barcelona. Now rent brings the owner of the object in Prague an average of 5.9% of the cost per year, and in Brno – 4.9%.
The market of long-term rental housing in the Czech Republic is currently affected by the abolition of state regulation of rental rates. The regulatory system was introduced at the turn of the 80s and 90s, after the property was returned to its former owners: the former tenants were forced to rent the apartments they occupied, and the state determined rates much lower than market rates. The regulatory system does not apply to new tenants, and yet some of the objects continue to be rented at low prices. In Prague, this system ceases to operate in 2011, in some cities its term has been extended until 2013.
HomesOverseas.ru
