Experts: One fifth decrease in flat prices in one year

Hana Vorlíčková
27. 8. 2008 14:30
Supply of flats exceeds demand in Czech Republic
Foto: Ondřej Besperát

Prague - The following twelve months could see prices of flats in the Czech Republic decreasing by one fifth.

Or, at least the majority of the ten real estate experts Aktuálně.cz approached believe so.

"I expect a sharp decrease in prices to take place at the beginning of the new year. Next summer, flats may be 20 percent cheaper," vise-president of Association of Real Estates Offices (ARK) Ivan Žikeš said to Aktuálně.cz.

Read more: More foreigners now keen on buying Czech real estate

Normal market development

Owner of Europe Central Holding Jiří Pácal agrees. "I reckon that prices of flats fall by 10 percent by the end of the year," Pácal said, adding that this is to be understood as a common market development.

"It is necessary to take into account that there are periods where flats get cheaper, while there are also periods when the prices go up."

The supply has been lately exceeding the demand and therefore certain types of flats are getting cheaper.

Read more: Thousands of flats stay empty as demand shrinks

Price balancing

"Since January, some prices have been balanced. 'Second hand' flats grew cheaper by one tenth compared to the end of the previous year," Tide Reality real estate agency´s head Pavel Velebil said.

However, unlike majority of the real estate experts Aktuálně.cz asked, Velebil doesn't think there will be a sharp decrease of the prices of flats. "I expect stagnation," Velebil said.

If the prices of flats fall, experts advise to start considering a purchase.

"If you have extra money, wait for one more year and then buy a flat. Not only will you have a wider selection, but a better price as well."

Read more: Property statements of MPs: loans, gifts, extra jobs

US mortgage crisis

The US has seen a growing trend of real estate repossession amid its worst banking crisis since the 1930s´ Great Depression. Bursting the housing market bubble caused the US flat prices to decrease by 20-30 percent.

Czech bank officials claim that the US mortgage crisis had not affected the Czech Republic.

On the other hand, Czech banks have made their mortgage loan regulations stricter since the American mortgage crisis hit Europe. "Banks are certainly more careful about giving loans to people these days," Pácal said.


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