Czech residential prices will fall “several percent” in 2020, according to the Czech Banking Association’s chief consultant Vladimír Staňura. He told Info.cz that while prices for new flats hit CZK 107,700 per square meter (7 percent higher than a year ago) there’s now very little room for further inflation. In addition, if unemployment begins to grow, there will an increase in the number of people who default on their mortgages (currently 1.4 percent). Four straight years of growing supply has brought a measure of competition to the market, he says, while tougher regulation on services like Airbnb have also helped. He noted that the Czech National Bank believes that residential prices are 15 percent overvalued and that they’ve risen 65 percent since 2014.
In the long-term, predicts Staňura, the market will shift increasingly to rental, though he doesn’t see much room for additional rental growth. The average 60 sqm flat outside the center now costs CZK 22,000 per month, while the CBA calculates that a 3-bedroom unit costs the average Prague resident 74 percent of their salary. He told Info.cz that such figures are equalled only in Bratislava and in Poland, whereas in Frankfurt and Berlin, the average resident pays less than 55 percent of their salary. In Germany, 50 percent of the people live in rental properties, while in the Czech Republic just 20 percent do.
