According to the founders of the Czech Housing Fund, last year brought a number of changes to the real estate market, and some market segments will recover from them for a long time to come. For example, in tourist-attractive locations, short-term rents have collapsed due to the coronavirus pandemic. The data from the Real Estate Cadastre so far also show that the year 2020 was rather below average in terms of completed transactions. The availability of owner-occupied housing is declining, which may, in the long run, have an impact on the increase in demand for rent and the development of the rental housing market.
“According to Eurostat, the share of rental housing in the Czech Republic is historically at a relatively low level (around 22%), which is significantly below the EU average (approximately 30%). Especially in recent years, however, all the preconditions are being created for this share to increase in the future. Just look at the intentions of large developers, who already plan to set aside a significant part of their production for rental housing. This is a relatively new phenomenon that is unparalleled in the post-revolutionary history of the Czech Republic, ”explains Jakub Kořínek, co-founder of the Czech Housing Fund (Fond). According to him, the attitude of those interested in housing and their behavior is also changing, both in larger cities and in regions.
Although the year-on-year decline in rental prices on a national average was affected by Prague, on the contrary, most regions recorded a year-on-year increase in rental prices. However, the market has changed regardless of the covid-19. Last January, the investor had to reckon with the fact that he would pay a property acquisition tax of four percent and the average interest rate (p.a.) on mortgages was, according to data from the hypoindex.cz website, almost 2.4 percent p.a. But now the tax is abolished and the average rate has dropped to two percent p.a. According to Jakub Kořínek, all this clearly benefits the market.
This year, sales prices will still rise slightly, the question is further development
“As far as this year is concerned, we still expect modest growth. Stagnation or decline is, in my opinion and what we see in the market, unlikely. Some analysts predicted a drop in prices the year before, but this did not happen and apartment prices in some districts rose by more than ten percent year on year. If the situation with coronavirus cannot be resolved satisfactorily and definitively and the current recession escalates into a full-fledged economic crisis, it can be expected that corrections will also occur in the residential market, ”warns the co-founder of the Kořínek Fund.
At present, he sees two opposing tendencies in the behavior of Czechs. On the one hand, fears about the future and declining incomes in some sectors, on the other hand, a large amount of free money and the effort to place it in a safe and stable investment, such as real estate, auction pictures or banknotes. According to Jakub Kořínek, this second factor will prevail this year if it is further strengthened by the start of vaccination against covid-19.
The development will also be influenced by the situation around the new building law, from which the legislators promise to speed up construction and increase housing production. According to Jakub Kořínek, the abolition of the real estate acquisition tax and falling interest rates are undoubtedly a boost for the residential market, but in the reality of rising apartment prices, they have only a limited effect on the average person interested in buying an apartment. It can be expected that many people interested in buying an apartment will choose a waiting tactic in times of uncertainty and will temporarily choose rental housing.
