Prices of flats fell by a further 2.1 percent quarter-on-quarter in the second quarter of this year, while prices of houses fell by 0.6 percent. On the other hand, land prices rose further by two percent compared to the first quarter. This is according to the HB Index by Hypoteční banka, which belongs to the ČSOB group.
The HB Index is based on realistic estimates of the market prices of properties purchased by clients of Hypoteční banka through mortgage loans. The bank first published the index in April 2011.
As in the first quarter, house prices continue to fall across all regions. “The rate of decline slowed down slightly between the first and second quarters, but apartment prices continue to fall,” said Martin Vašek, CEO of Hypoteční banka. On a year-on-year basis, apartment prices fell by 3.2 per cent. This development is expected and will continue. “What is interesting is that the interest in previously popular types of housing units, such as 3 plus 1 and 3 plus kk, is also decreasing,” he added.
The biggest price drops were recorded in the Ústí nad Labem (minus 5.7 percent), South Bohemia (minus 4.3 percent), Liberec (minus 3.7 percent) and Olomouc (minus 2.8 percent) regions. In Prague, the prices of flats fell by 2.2 per cent, while the price of new-buildings also fell. On the other hand, prices were the least cheaper in Vysočina.
In terms of the total volume of flat sales, the market is gradually stabilising. The supply has stabilised, and so the fall in prices has also slowed down. Sellers are increasingly trying to lure buyers to individual discounts, both for older properties and for new buildings. In the case of prefabricated flats, discounts are often up to twice as high as in the case of brick ones. In some regions, the selling time of properties has been extended by up to five times.
Rental housing remains popular. “We can see a significant change especially among the young generation, who no longer buy so-called starter flats, but go straight into renting. However, this is complicated by the small supply of rental housing outside the big cities,” Vašek pointed out.
The biggest influence on the development of land prices is its size and shape, utilities, transport accessibility and amenities, orientation to the cardinal points and slope. Demand still exceeds supply. As the price rises, so does the demand for land in locations further away from the outskirts of large cities. Here, however, supply is significantly hampered by outdated zoning plans and infrastructure capacity.
In the second quarter, demand for detached houses and recreational facilities declined. Buyers’ lack of interest in large detached houses without renovation, mainly due to the persistent rise in energy prices, had a significant impact on the market. For holiday homes, the drop was dramatic, in the order of up to 40 per cent. On the contrary, cheaper detached houses are enjoying interest. The largest volume of construction is in the Central Bohemian Region and in the vicinity of Brno. Modular wooden buildings, as well as container and mobile homes, are also popular.
“We have been observing the trend of economical housing on the Czech real estate market since last year. Rising energy prices have accelerated consumer interest,” concluded Vašek.
Source: Hypoteční banka and CTK
