A further clash of supply and demand for old homes is expected in the first half of next year. In fact, subsidy programmes are expected to become even more accessible – financing options will be supported by a soft loan from a building society. Many owners of old houses are now deciding whether to sell theirs that are not in use. Prices vary by tens of percent in different places in the Czech Republic – in the Central Bohemia region, according to Bezrealitka data, the price is double that of the cheapest regions. Apart from the location, the price is mainly influenced by the attributes of the land – the garden, the cottage location, but also the well.
In the past year, a number of buyers took the opportunity to buy an old house at a good price. The interest is higher thanks, among other things, to the New Green Savings Programme, which has already supported over 186,000 projects. In the spring, interest in the subsidy programme Repair Grandma’s House is also expected to grow – although it has been slower to get off the ground due to the complexity of the application, it is attracting interest by providing funds upfront. In addition, next year, the subsidy is expected to include a soft loan from building societies – making the programme accessible to even more households, and therefore another wave of interest in older homes is expected. Many homeowners are therefore deciding whether to keep their old house or sell it and use the proceeds in other ways. Although the market for old houses is now relatively saturated, interest remains above average.
In addition to those interested in living in a renovated old house, there are people on the other side of the barricade who own such a house and have no intention of living there and investing in its repair or building a new one on the same site. Moreover, as of the first of January next year, they will be obliged to pay property tax – even though it will typically be in the hundreds or even lower thousands of crowns for a grandmother’s house.
Generally speaking, if the house price has been falling this year, it is likely to fall further. Conversely, if it has stagnated or even risen, then it is worth waiting to sell as it is likely to rise further. Typically these will be houses in good locations. These locations can be found mainly on the inner border of the Central Bohemian Region and in the immediate surroundings of Brno.
“A grandmother’s house can serve as a good basis for a family to buy a property in Prague or even to provide for their children intergenerationally – the funds from the sale will cover the down payment and reduce the amount that needs to be obtained with a mortgage,” says Ondřej Strada from Bezrealitka. “The average price of a starter apartment in Prague is around CZK 5 million, while a larger apartment costs CZK 7-8 million. The down payment at a ten percent LTV is at least 500 thousand, and 700-800 thousand for a couple or family. The average transaction for a typical ‘grandmother’s house’ in the Czech Republic is around CZK 1.5-3 million, so the funds from the sale can significantly help with a mortgage for an apartment in the city.”
The closer to the metropolis, the better the price.
Unsurprisingly, people in Prague and Brno have the greatest purchasing power. Thus, the best price for a house can be offered in the Central Bohemia region, where, according to Bezrealitka data, the average price of a house is CZK 60,718 per square metre, and in the South Moravian region, where a square metre sells for an average of CZK 52,716 – except, of course, in Prague, where the price is diametrically opposed – a square metre can be bought there for an average of CZK 110,664. On the other hand, houses in the Karlovy Vary Region, the Hradec Králové Region and the Vysočina Region are the most affordable.
A special chapter are houses in attractive tourist locations, which potential buyers will want to use as a second home or a year-round habitable cottage. Especially in popular skiing areas, the price of such a house can be somewhere between the price in the Central Bohemia Region and Prague, depending on the construction and technical condition.
In the national average, prices are generally falling. This is due to the fact that the better houses are disappearing from the offer, and also because buyers are waiting for lower mortgage rates. In Prague itself, the price is the highest, but the number of old houses sold is absolutely minimal. According to Bezrealitka data, the volume of house sales in Prague has fallen by 70% in the last year.
“A big city nearby attracts buyers with more purchasing power – good access to the regional city increases the value of land by a third compared to the regional average. This is especially true in the Central Bohemian Region – in the last six months, many Prague residents have moved there and in the second quarter of this year, these new residents even tripled the volume of transactions,” says Ondřej Strada. “What is important is the time it takes them to get from the door of their home to the door of their workplace in the capital by public transport – it cannot exceed one hour due to the regular commute.”
Many sellers not only in Prague, on the other hand, have withdrawn their offers from the market due to low prices – rather, it is those who have to sell because they need the money elsewhere. Owners are expecting a wave of buyers in the first half of this year, when mortgage rates are expected to fall. With more demand, some will be able to raise their offer prices.
“Older properties are subject to the ravages of time, even if they are not lived in – a typical example is properties freezing in winter,” says Ondřej Strada. “A property in need of renovation can gradually become a leaky house that will reduce the value of the land rather than the other way around – the cost of a turnkey demolition is in the hundreds of thousands of crowns.”
Land is the foundation.
In addition to location, the quality of the land also influences the price. Land prices, unlike the rest of the market, are steadily rising, according to Bezrealitka data, by 5-6% year-on-year for non-building land and 7-8% for building land. The quality of the land is therefore the determining factor for the value of the house. What is a potential buyer interested in?
“For a buyer, in addition to the cadastral data, it is also important to verify the information from the valid zoning plan and the existence of utilities in the area, whether it is water supply, sewerage, gas or telecommunications. It depends not only on whether the property is connected to the utilities, but also on whether the utilities are available at all in a given location,” says Jan Záhora from NEMO Report, a company that deals with complex real estate verification.
The value of land is also increased by the undeveloped area – it is attractive for those interested in a house and, consequently, a building plot, if the building or the buildable area has a garden – the value of the land will increase by an average of 10%. The location is also key. Land in a popular cottage location or tourist attraction can be worth 15% more than comparable land outside such a location. Mainstream tourist locations such as the Giant Mountains or Sumava are close to Prague in price.
A well can also increase the offer price. Establishing a new well is a legally and financially demanding process – the price is in the hundreds of thousands of crowns. If a well belongs to the house, even if it is older, it increases its price by an average of 5%.
