Prague - Demand for flats has been falling sharply in recent months, with the decline reaching about 20% year-on-year, the three largest developers in the Czech Republic have told Aktuálně.cz.
"In January-May, demand fell by 27% year-on-year," said Dušan Kunovský, the owner of Central Group, the largest developer focusing on housing construction.
His rivals agree the real-estate market was hit the hardest in April and May.
"We did not register a decline in January and February, but in April and May, interest slumped by 20% year-on-year," says Ondřej Šuch, a spokesman for Skanska.
Finep's Lenka Temrová confirms the trend: "In April and May, demand fell roughly by 16%," she says.
But the drop has not affected the whole country. Developers estimate demand in Prague fell the fastest; after all, this is where they have most of their business. On the other hand, interest in Ostrava, Hradec Králové and Beroun keeps growing slightly.
Deeper slump seen
Real-estate analysts predict the decline will deepen during the summer. "We expect the market could start to grow slightly again in autumn," says Kunovský.
The strong decrease in demand is no surprise: At the beginning of the year, both developers and real-estate agents predicted the situation, saying people who had wanted to buy a new home had mostly done so before the end of 2007.
The value-added tax rules for housing purchases were different before end-2007, making many (especially large) flats cheaper.
Lower demand, fewer flats
Developers also expected clients to "pre-stock", and they are planning to complete fewer homes this year. "I expect it will be about 10-15% less," Pavel Velebil from Tide Reality said in February. In 2007, builders completed almost 42,000 homes, the Czech Statistical Office has said.
This year's falling demand is illustrated by data from the Regional Development Ministry, which said clients took "only" 14,597 mortgages worth a total of CZK 25.8 billion in the first quarter of the year, a year-on-year decrease of 8.5% when it comes to volume.
The market expects an even more radical decrease in the second quarter, also because of gradually growing lending rates.
Adapted and republished by Prague Daily Monitor
