The owner of the residential development company Evzen Korec is warning that the coming wave of bankruptcies and rising unemployment will create havoc on the unprepared housing sector. Rising land costs as well as the runaway construction price inflation have combined to push prices to unrealistic levels. With unemployment, warns Korec, will come mortgage defaults and a rise in the number of flats being sold at discounted prices. Speaking with Forbes magazine, Korec warns that the segment of the market are flats being marketed at luxury prices above CZK 110,000 per sqm which don’t actually have that value. “I expect there to be zero interest in these over-priced corpses and that this will send their prices down by entire percentage points,” said Korec. “Despite that, companies will still have problems selling those units. Consumers are figuring out that the use of the term “luxury” is just a marketing label that really just means far more expensive.” He claims that there are only a couple of projects on the market that deserve the label of luxury and that they are found in exceptional locations with unique views.
