The prices of older flats are likely to stagnate or grow slightly in the order of one percent next year. The development is expected to be similar to that in the second half of this year. The volume of mortgages granted should rise slightly, but average rates should not fall below four per cent. Housing will therefore remain less affordable for most people and involuntary interest in rental housing will continue to grow. Rental prices should therefore not fall in 2024.
“We don’t expect a widespread cheapening anymore. In January 2023, older flats in Prague were sold at prices comparable to January 2022 and the price progress then slowed down. While at the beginning of the year prices were falling across the country by between four and seven per cent, in April they were only falling by between two and four per cent,” said Lumír Kunz, Managing Director of FérMakléři.cz.
This summer and autumn, prices of older flats were already stagnant or growing by one to two percent, according to an analysis by FérMakléři.cz. The only major city in which prices fell this autumn was Ústí nad Labem.
According to David Eim, deputy chairman of Gepard Finance, interest rates can be expected to fall gradually in 2024, but not significantly. “I don’t think the Czech National Bank (CNB) will be in any particular hurry to cut rates. I would say it will be quite cautious. I assume that average rates will fall below five per cent, but I do not believe in a more significant fall below, say, four per cent. Rising rates are always faster than falling rates,” Eim said.
On December 21, the CNB Bank Board cut the base rate by a quarter percentage point to 6.75 per cent. It was the first time interest rates have changed since June 2022. The CBR expects inflation to fall to three per cent early next year. However, CNB Governor Ales Michl also warned that if inflation does not recede steadily, the CNB could halt the rate cut process at any time. He added that despite the current cuts, interest rates would be higher in the coming quarters than the CNB’s macroeconomic forecast would predict.
Demand for rental housing has increased in recent years, not least because of the unavailability of owner-occupied housing. Michal Hrbatý, CEO of UlovDomov.cz, expects that the interest in rental housing will continue to grow in 2024. “Despite the reduction in interest rates on mortgages, the prices of their own housing are unaffordable for many people, so they choose the alternative of renting. Unless something fundamental changes in the global market, the growth in rental prices will remain constant,” Hrbatý added. Experts do not expect significant changes compared to the current situation in the price development of rents in the regions.
Source: CTK
