Czech Real Estate Market Becoming a Buyer’s Market

The real estate market in the Czech Republic has seen a significant shift in the past year, with an increase in the number of properties available, and a downturn in both the number of properties sold and the volume of mortgages being taken out. 

This change has been driven by a number of factors, including economic uncertainty and changes in consumer preferences. In this article, we will take a closer look at the key takeaways from the real estate market in 2022 compared to 2021.

Now, I’m a naturally curious person and as such, I’m constantly monitoring the market but even I was surprised to see the number of available property adverts on increased 100% year-on-year for both rental and purchase properties. You might be thinking this means there’s a lack of potential buyers out there, but it’s more to do with properties are sitting on the market longer. What I’m seeing though is not necessarily an aversion to buying, but rather people being cautious and keeping an eye on the market, waiting for the good deals.  

For example, January is normally the quietest month of the year in terms of the property market, but I’ve had a record number of inquiries from potential buyers, which suggests that despite the downturn in the market, there is still a high level of interest in real estate in the Czech Republic. 

The total amount of properties sold decreased by 26% in December 2022 compared to December 2021, both for flats and houses. This trend is also reflected in the number of flats available for sale for longer than 120 days, which is 36%.

One of the most significant changes in the market has been a drop in the volume of mortgages being taken out. In 2022, the mortgage market suffered a 64% drop compared to 2021. The reasons for this, in my opinion, include the war in Ukraine, high energy costs, general economic uncertainty, and relatively expensive housing compared to the average salary

Another trend that has emerged in the real estate market is a decrease in the average sale price of flats. In December last year, the average sale price was 6.2% below the asking price. This trend is also reflected in a difference in asking prices between Q2 and Q4 last year: 6.9% lower for panel flats, 4.9% for brick, and 2.5% for new developments in Prague. To put that in perspective, if a panel flat was being advertised 6.9% cheaper than it was previously advertised for, combined with the 6.2% average difference in asking price to sale price, a lucky buyer could have scored themselves a 13.1% discount!

But while property sales were suffering, owners offering their properties for rent experienced the reverse, with an average 8.3% increase in rental prices in Q4 compared to Q1. This was largely down to supply and demand, with demand increasing due to the influx of people fleeing the war in Ukraine and people deciding to rent rather than buy right now.  

Of course, there are other reasons affecting the market downturn too. To summarise them all:

  • 20-year high mortgage rates
  • High property prices push some people out of buying
  • Regulation over lending capacities introduced by the Czech National Bank 
  • The war in Ukraine
  • General economic uncertainty 
  • Rising energy costs

All that being said, we are seeing some light at the end of the tunnel. After 10 years in this business, I’m happy to finally be seeing a proper shift towards it being a buyer’s market. Especially in recent years, it’s been hard for buyers with high competition for properties leading to bidding wars in some cases. 

I even had one case where a seller decided not to sell to a mortgage-backed buyer because it would have been too much work for them! (Pro tip: It really isn’t!)

Today, it’s the opposite. As a buyer, you can negotiate the price, there is lower competition for properties, and in some areas there are general price drops. 

Happy property hunting! 

And if you want help with the whole process, you know where to find me. 

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