International Property News

New home prices grew the fastest in Ostrava in 2007

21st April 2008

The city of Ostrava in northern Moravia showed the fastest year-on-year growth in prices of new flats of more than 50 percent in 2007, representatives of property adviser King Sturge and real estate agency Bonus Group told a news conference Monday.

Hradec Kralove in eastern Bohemia placed second with a 41 percent increase, followed by Plzen in western Bohemia where prices of new flats rose by 29 percent. This year, the prices should not rise at such a fast pace.

Prices of new flats in the capital of Prague grew by around 16 percent on average last year. But in some localities, they added even 30 percent.

The increase in property prices in regions had considerably lagged behind the growth pace in Prague. Prices of flats in regions grew fast above all because they are catching up with the growth pace if Prague.

The rise was pulled by increasing average wages, cheap mortgages and also the change to the VAT rate as of January this year which forced many people to buy a new flat in 2007.

Prices of new flats were the highest in Prague where people paid more than Kc58,000 for a square metre on average last year. In Brno, the price amounted to Kc43,000 per a square metre, while in Hradec Kralove it reached Kc40,000.

This year, the growth in prices of new flats should slow down to around 6 to 8 percent, said Bonus Group board of directors chairman Jan Rosak, adding demand for luxury flats would increase in 2008.

Localities outside Prague have attracted only regional developers and building companies until now, but the trend is beginning to change as national players and foreign developers are entering the regions, said Rosak.

Revenue from rents in Prague will remain at 5 percent this year, while revenues from rents in regions will grow. The revenue from rent in Brno, for instance, already reaches almost 6 percent.

Building companies completed construction of 41,650 flats in 2007, the biggest number since 1991, the Czech Statistical Office has said.

Source: Prague Monitor