International Property News

Prices of Czech flats grow slower in Q3

17th November 2008

The growth in the prices of flats offered on the domestic market in the third quarter slowed down to 5.4 percent, according to Czech Statistical Office (CSU) latest data CTK gained from CSU website.

Real-estate experts ascribe the slower growth to the global financial crisis.

Prices of flats in Prague grew faster - by 6.1 percent, but prices outside the Czech capital climbed up by just 4.7 percent.

In international context, the fact that prices of housing in the Czech Republic grew also in the third quarter is quite unique, real estate expert Martijn Kanters told CTK.

Still in the second quarter, prices of flats offered in the Czech Republic grew by 7.1 percent year-on-year. Prices in Prague rose by 5.4 percent and prices in the rest of the country even by 8.7 percent.

The third-quarter results mean a change in trend. In the past years, prices offered for housing mostly grew faster in regions than in Prague.

"The third quarter of 2008 was the first quarter since the year 2004 when the growth in prices was higher in Prague than in the rest of the country. It therefore seems that the current market conditions have the biggest impact outside the capital," Kanters said.

Ondrej Novotny, analyst at consulting company King Struge, has a similar view.

"There is uncertainty on the labour market..," Novotny said.

With respect to much lower incomes in regions, it seems the housing segment of the lower middle class will be hit the hardest," Kanters added.

Kanters believes the breaking of the trend will continue and may be even more pronounced in the coming months.

The main expected trend will be a much lower average price growth in regions and strong results in Prague, Kanters noted.

Prague attracted developer projects earlier than regions. It is also much stronger financially and has the biggest housing market in the country. This is why prices develop differently, Novotny said.

Residential real estate developers started to discover regions later but some regional capitals saw a boom then, he noted, adding that Ostrava will probably again be the number one in this respect.

According to CSU latest data, 11,914 flats started to be built in the Czech Republic in the third quarter, down 5.3 percent year-on-year.

The number of completed flats grew by 9.5 percent to 9,559.

Source: Prague Monitor