Real estate prices in the Czech Republic continued to grow rapidly in the first quarter of this year, according to the HB Index, which was provided by Hypoteční banka today. Flats rose by 20.6 percent year on year, family houses by 19.6 percent and land by 23.7 percent, which is the most in 11 years of publication of the index. “The Czech National Bank’s increase in interest rates has not yet slowed down growth,” said Jiří Feix, Chairman of the Board of Directors of Hypoteční banka and ČSOB Stavební spořitelna.
According to Feix, prices continue to grow at the same rate as last year. “The small supply of real estate, the high growth of construction costs, the fear of a further rise in interest rates and the effort of people to protect their funds from falling real inflation are probably contributing to the rise in prices,” he added.
Compared to the previous quarter, the growth of real estate prices accelerated mainly to flats to 5.4 percent from five percent in the last quarter of last year. For family houses with a rise in prices of 4.7 percent and land quarter-on-quarter more expensive by 5.6 percent, the rate of price increase is similar to the previous quarter.
According to Feix, flats rose the most in the first quarter in the regions where they have been the cheapest in the Czech Republic for a long time. In the Prague market, sales are gradually slowing down, but even here price growth is approaching five percent, he noted. “Prices for new constructions are beginning to reflect rising construction costs, but also increasing demands on the equipment of new constructions or a higher level of constructions in terms of proof of energy performance of buildings,” he added.
Of the family houses, people are still most interested in those who do not need reconstruction, due to rising construction costs, said Radim Maštalíř, an expert in property valuation at ČSOB. Hypoteční banka is part of the ČSOB Group. According to Maštalíř, those interested are looking for houses at a greater distance from large cities due to lower prices. “If people are interested in new buildings in development projects, they most often reach for terraced buildings. Overall, however, rising prices and the unavailability of building materials are a great burden for builders,” he added.
In addition to low supply, Feix’s land sales have long been affected by outdated land use plans and inadequate utilities. Also for land, there is mainly interest in cheaper ones away from the cities. In Prague, thanks to the approval of the fund’s participation of investors in the development of the area, Hypoteční banka expects an increase in demand for plots on brownfields, which have not yet been attractive to developers.
The HB Index is based on realistic estimates of real estate market prices purchased by Hypoteční banka clients through a mortgage loan. The bank first published the index in April 2011.
Source: Hypoteční banka and CTK
