Cheaper mortgages, returning demand, but also impatient owners waiting for households and individuals to feel like paying extra for their own home again. And the resulting further rewriting of price maps across segments and locations, barely managing to stabilize a bit last year. The end of the real estate winter of 2024 and the pre-spring will bring a whole host of changes. Based on the first weeks of January, what trends does Martin Ponzer, CEO of digital real estate service Bezrealitky, predict?
Interest rates will fall, prices will slowly return to growth.
One of this year’s most frequent queries will focus on the development of real estate prices. Will they rise, fall or stagnate in individual regions? The question worries both those interested in owning their own home and owners who want to sell and would like to get an idea of price levels in the coming months. Unfortunately, the answer is not clear-cut, but we can probably rely on one thing. The period of the biggest price drop is over.
“But by far the biggest influence on demand and prices will be available credit. That is, above all, the CNB’s policy and the supply of commercial banks in the area of mortgages. We expect a gradual easing there, but we can still argue about its speed,” mentions Ponzer. “Thus, at the beginning of the year, the market will be characterised by initial optimism rather than a substantial increase in mortgage applicants.”
However, it will be the greater availability of mortgages and more favourable lending that will gradually return pent-up demand to the market and start to push house prices upwards again. In cities such as Prague and Brno, this may be a leap in growth that may – at least temporarily – erase the last year of stagnation in asking prices.
“If anyone wants a clear sign that the trend is reversing, it’s the number of people they will start meeting on viewings. Of course, the number of people interested is a crucial element that allows owners not to discount the asking price at first,” mentions Ponzer. “This is already happening to some extent now. However, whether there will eventually be someone among the large number of bidders who will be willing to overpay the others, or whether the price will have to be lowered after all, no one dares to guess yet.”
Missing properties will return to the market.
In 2023, the rule was that those who did not have to sell, did not sell. The supply of real estate portals was therefore significantly poorer than a few years ago in many areas and segments in the case of new properties. On the other hand, the number of so-called “lagers” – poorly marketable properties that are offered for several months or even years in a row – has increased.
However, the situation could start to turn around as early as in spring – if the number of interested buyers grows, for example, scarce flats in central locations of large cities or some family houses could return to the offer.
“From my point of view, this will not be a leap in supply, the buying power will still be weak at the beginning of the year. However, we can definitely expect an expansion of the supply of flats in the wider centre of Prague, for example, in the course of the next few months. In Brno, a lot will depend on demand – if it rises again after more than a year of decline, then many properties will probably return to supply here as well,” Ponzer thinks.
And what kind of properties should we be talking about in particular? According to Martin Ponzer, it should be mainly smaller apartments up to 2+kk. These will be in greater demand due to the availability of financing and the growing number of single households. To a lesser extent, on the other hand, multi-room large and atypical flats will appear, where the price tends to be volatile. Although there are fewer people interested in them, they will appeal to a more affluent segment of buyers, for whom financing will also become more advantageous in the coming months than it has been so far. A number of new properties have already started to appear on Bezrealitky in the first weeks of the new year.
The beginning of the end of “cheap rents”.
Fundamental changes are also expected to take place in the rental market this year. It will continue the trend of recent years and, especially in metropolitan areas, average rents are likely to break new records. This year, Prague could reach CZK 370 per square metre and Brno CZK 290 per square metre of rented space. The reason is simple – with each new lease contract, the average rent rises. The pricing will also be influenced by the growing number of commercial rental projects, whose prices today are often significantly above the usual average.
At the same time, there is no reason for prices to fall – in Prague, Brno and the Central Bohemian Region, purchasing power remains high despite inflationary pressures, as does the willingness to pay extra for good rental housing.
“Even today, the price scissors are still significantly open on the market. Many people live in apartments at prices that are really low and, economically speaking, outside the market reality. However, such rental opportunities will rather diminish and the differences will slowly but surely start to level out,” mentions Ponzer. “Some consolation for tenants, however, may be that the quality of apartments on offer and their number will grow in direct proportion. Especially in the cities of the so-called metropolitan rings, more and more rental opportunities are being created. This is a good opportunity, for example, for residents of the Central Bohemia and South Moravia regions who commute to regional metropolises for work.”
Older houses at a good price, but interest will grow more in new buildings.
On the other hand, where prices are unlikely to increase for some time is the segment of older houses before reconstruction or, on the contrary, cheap new buildings – especially turnkey catalogue projects, prefabricated houses or lighter wooden buildings.
In the case of older family houses, the energy performance of the building and the potential amount of reconstruction costs will be the main deciding factor. Demand may be supported to some extent by state subsidy policy, but even so, an older house before reconstruction will not be for everyone and may not be an alternative to flats this year. In addition, there are still quite a lot of newly built family houses on the market from previous years. It is these constructions that may sufficiently saturate the market this year.
“In the first half of the year, from my point of view, it is the owners of dismantled houses who have not been able to sell them at the required price who will find common ground with new buyers who will enter the market in the current wave. The will to agree will probably be on both sides,” Martin Ponzer thinks.
What about owners who need to sell an older house? According to Martin Ponzer, it helps not to have unrealistic expectations and to sell not only the building but also the added value of the land and the adjacent surroundings, such as a private well, a large garden or perhaps an attractive location for a summer apartment or second home. However, at the beginning of the year, they will continue to choose from a rather below-average number of bidders.
Cottages continue to have good price tags.
Interesting opportunities may continue to open up in the holiday home market. The so-called “exhausted demand” will continue to manifest itself at least until the spring. The number of people interested in cottages and chalets will be low for the second year in a row and those who want to buy will be able to choose between the available offer even in the best locations.
The number of cottages and chalets on offer is no longer falling at the same rate as for houses or flats. The offer could therefore continue to include a range of interesting properties whose owners are willing to negotiate.
“My personal bet is that the first changes will come with spring and warm weather. We will know as early as April whether the regular spring demand for holiday properties has resumed and how strong it is. In the meantime, those who have the money will in most cases go for the really nice properties – whether they are cottages with their own land near the big cities or log cabins in the top tourist destinations,” concludes Ponzer.
