The pandemic is having a profound impact on the residential market in the Czech Republic with a 25% fall in mortgages for the month of March and experts predicting as much as a 50% drop in April. According to an article in Hospodářské noviny, the reason for this sudden seizing up on the market is not just restrictions on the freedom of movement, but the rapidly worsening economic situation along with fears of a wave of unemployment. According to real estate experts contacted by the newspaper, a fall in prices can be expected for poorly located properties, while the rapid inflation of more valuable properties is probably over. Otherwise better placed real estate may not see much of a change in prices for the time being, but the pace of sales looks set to drop.
“At the moment we can expect that buyers will try to negotiate discounts,” said Pavel Kliment of KPMG. “But vendors are going to want to go along with them.” HN warns that it would be similarly unrealistic to expect prices to fall because the owners will be able to pay their mortgage installments. It points out that banks have a real distaste for forcing their clients to sell their properties and usually push them into changes for the payment schedule.
