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* CZ: Avoid mortgage redemption penalties
* CZ: When to consider QNUPS
* CZ: Prague Property Market
* CZ: Zack Crichton Prague
* CZ: 39% less mortgages
* CZ: Ocro loss up
* CZ: Flat construction down
* CZ: German fund buys Prague office
* CZ: Land registry numbers fall
* CZ: Prices stop falling
* CZ: Prague Hotel revenue lower
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* PL: Next property boom
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* CZ: Building output grows
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* CZ: Bank cuts base rate
* CZ: Prague prices fall
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* CZ: Copa Centrum Prague
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* UK: Home repossessions rise
* CZ: Czech rents rise
* CZ: Property price growth slows
* CZ: Holesovice Brewery completion
* UK: House sales slump 53%
* CZ: Prague's city within a city
* CZ: Mortgage demand falls slightly
* UK: House prices fall 1.3% September
* CZ: Brno grows a Manhattan
* RO: Bucharest construction boom
* CZ: Czech housing funds
* PL: Dom development in Wroclaw
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* CZ: Rents rise by 50% in some towns
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* CZ: Hourly wage up 41%
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* CZ: ECM issues more shares
* UK: House prices fall 10.5%
* CZ: Interest rates down to 3.5%
* CZ: Some cities go down with rents
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* CZ: Orco 3bn euro project
* CZ: Building output up 2% in April
* CZ: New district in Prague
* US: No pick-up for US housing
* CZ: Tourist numbers up 10.5%
* US: Homes best bargin since 04
* UK: Taylor Wimpey close 13 offices
* US: California sales up 22%
* US: Construction picks up in April
* CZ: M&M reality doubles turnover in 07
* CZ: Building output slows 0.8% March
* CZ: Builders finish 9.8% more homes
* UK: Mortgage lending hits 33-year low
* UK: Redrow downbeat on market
* CZ: Immorent CR lays cornerstone
* UK: Repossession orders climb by 17%
* CZ: Three bidders for Rohansky ostrov
* UK: Halifax confirms price fall
* UK: Prices down 1% y-on-y
* US: House prices show steep fall
* UK: Prices slow down
* CZ: J&T to invest 90bn
* US: Home sales at 16yr low
* CZ: ING profits up 44%
* US: Prices continue to fall
* CZ: Prices grow fatest in Ostrava
* US: Manhattan prices defy trend
* CZ: Property seizures up
* CZ: Central Park Praha
* CZ: Volksbank profit up 80%
* UK: Housing gloom
* CZ: Building output up 11.5%
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* CZ: Land speculation blossoms
* UK: Warnings over mortgage lending
* US: Foreclosure bill passed
* CZ: Finep start huge Prague project
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* UK: House prices drop sharply
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* CZ: Inflation & Unemployment down
* US: Rust belt put on housing bill
* US: Late payments at record high
* CZ: HSBC courts Czech millionaires
* CZ: Czech rates stay at 3.75%
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* CZ: Czech managers 34th best paid
* CZ: Manhattan prices reach record
* CZ: Rich Czech's flood Sumava
* CZ: Czechs buy record airline tickets
* CZ: Raiffeisenbank, eBanka profits up
* CZ: Czech Banks profits up 24%
* CZ: ECM profits exceed expectations
* CZ: Record CZ income tax revenue
* CZ: Internet Ad spending up 70%
* CZ: Orco profits up to 3bn CZK
* CZ: ECM profits up 28%
* CZ: Skoda sales up 39%
* CZ: Developer VGP 2007 profits treble
* CZ: Brno get ratings up grade
* CZ: Record CZ card payment growth
* CZ: GDP at 82% of EU level
* CZ: Allianz net profit soars 54%
* CZ: Guests at luxury hotels up 11%
* CZ: Current account CZK 4.8bn surplus
* CZ: Foreigners boost accommodation
* CZ: Tourism revenues rise 7.3% in 07
* CZ: Wages rise 7.3% in 07
* CZ: Car sales rise 13% in Feb
* CZ: ECM trebles profit
* CZ: Firms pay av wages over 100,000
* CZ: Prague Europe's 3rd best retail city
* CZ: Cesk nets CZK 12.15bn in 07
* CZ: Czechs demand better facilities
* CZ: Demand for homes still high
* CZ: Komercni Banka profits up 21%
* CZ: Staff in car industry up at 124,000
* CZ: Banks compete for millionaires
* CZ: Bonatrans Group sales up 17% 07
* CZ: Koreans to invest billions of CZK
* CZ: Austria's VIG comes to Prague
* CZ: KB's net profit up at 10.8bn 07
* CZ: Telefnica O2's 07 profit 9.5bn
* CZ: Prague Household debt tops 900bn
* CZ: Prague skyscrappers
* CZ: Tourist numbers up 3.8%
* CZ: CZK 10bn spend by Hyundai
* CZ: Prague Houses on Letna plain
* CZ: Prague 38% uplift in homes 07
* CZ: Prague 12th richest region in EU
* CZ: eBay comes to Prague

International Property News

Czech Property - Prague Property Market Outlook

22nd February 2012

In these uncertain times many of our property investor clients are asking us what to do with their properties in Prague buy more, hold or sell. This is a perennial question, the answer to which depends on how you view the Prague property market and its future course.

The Prague property market peaked in mid-2008 which happened to coincide with when the worldwide financial crisis really started to bite in the Czech Republic. At this time it was obvious to many that property prices were going to fall, however, it was just very difficult to predict by how much and for how long.

Weve noticed two patterns of behaviour amongst investors over the last few years. Leading up and into 2009 many investors took our advice and chose to sell up and move money into more profitable assets, such as stocks and commodities. At the same time other investors, quite reasonably, took the view that property is a long term investment and the Czech Republic is not a bad place to hold part of their portfolio.

Over the last 3 years, this second group of investors have had to watch their properties decline in value by around 30-40%. This dramatic drop in prices has been accompanied by a decline in rental prices. This is a painful combination to shoulder, especially for those investors who had leveraged themselves heavily in the later stages of the boom years.

After 3 years of pain, and as property prices in Prague continue to soften with no sign of turn around, increasingly large numbers of investors are choosing to cash out rather than face another 3 years of financial uncertainty. So again, like in 2008/09, weve been assisting these property owners to sell their properties in 2011/12 - if properties are reasonably priced and well marketed they still sell in normal timescales.

One of the main reasons that prices continue to fall is there is simply too much supply on the market relative to demand.

On the supply side developers simply built too many properties in the boom years - and seem to continue to build and build! This oversupply is going to take quite some time to sort itself out and is killing any chance the market will recover.

On the demand side there is nothing on the horizon that would lead to increased demand. Wages are not rising significantly, unemployment is unlikely to fall much, the population is not rising very quickly, taxes are unlikely to go much lower and more mortgage rates are already extremely low and so on.

If it wasnt for the low mortgage rates currently available property prices would have fallen even more quickly than they already have done.

The big concern here is that inflation is starting to rear its head. Anyone living in the real world buying everyday items such as bread or fuel will know real inflation is certainly above 10% per annum (dont believe the government massaged figures of just over 2%). This is eroding purchasing power and the central bank could be forced to increase interest rates in an attempt to control prices which would be the final nail in the coffin for the property market (well look at the dangers of rising inflation and the European debt crisis in more detail in future articles and what this means for your property portfolio).

Unfortunately, this all adds up to property prices in Prague continuing to fall.

The market seems to be in a sort of limbo where buyers can see prices falling and feel prices are too high, and yet sellers (particularly many developers) are still living in the past and maintaining high prices hoping the market improves. We dont know what will remove this blockage (perhaps it will be the banks finally realizing they have to do something about their growing number of non-performing loans) but it needs to happen, and when it does we will see more rapid property price movements until they find their right level, from where a fully functioning market will be able to rebuild itself.

Despite the gloomy conclusion, this is far from a blanket recommendation to sell. Indeed, we still believe Prague is a good place to hold property over the longer term and falling prices means better opportunities for buyers. If youve not already done so, it could be a good idea to get rid of the dogs in your property portfolio, raise some cash to be ready for future opportunities and look after your cash cows.
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