+420220580154In 2012, 4,000 apartments were sold in Prague. This figure is almost double the figure in 2009 when the Czech real estate market experienced a severe recession. Since 2009, there has also been a trend of a gradual increase in sales and the situation has nearly returned to that before the crisis.
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THE PRAGUE REAL ESTATE MARKET FOLLOWING THE ECONOMIC CRISIS IN EUROPE
The Czech Republic is known for its economic stability, both in the stability of the local currency compared to the volatility of the euro and the dollar following the economic crisis and also in the real estate market that has experienced a drop in prices but has not experienced the crash in prices that we know of in countries suffering from a severe economic crisis.
In 2012 the Czech republic began to feel the stages of exit from the economic crisis. This was expressed in a rise in real estate sales. In fact, real estate prices remained as low as in the period of the crisis which had almost passed.
The causes of the rise in sales of apartments in Prague
- Particularly low interest on mortgages.
- A rise in the supply of cheap apartments, where the prices are the lowest for the past five years.
- The investors’ assumption that in buying an apartment they will avoid inflation and provide themselves with a financial cushion before retirement.
PRICES OF REAL ESTATE IN PRAGUE
Property prices in Prague have fallen considerably in comparison with the period before the crisis. Buyers place great emphasis mainly on projects at a low price level of up to 50,000 korunas per square meter (including VAT).
Sales of new apartments in Prague by quarters Segmentation of types of apartments sold in the third quarter of 2012
The analyists’ evaluation is that this year too the demand will be concentrated on projects at this price level.
Three-quarters of all the sales will be at a price level of up to 55,000 korunas per square meter (including VAT). However, the price level above 80,000 korunas per square meter (including VAT) wil make up only 3% of all sales. This is influenced greatly by the fact that the supply at the moment in the real estate market in Prague is about twice as much as the demand.
PROPERTY LOCATIONS
The various quarters of Prague interest different kinds of investors. In Prague 9 you wil find mainly new apartments, which make up about 30% of the total supply in Prague. Prague 5 is in second place with 1,518 apartments for sale (22% of the total supply) and Prague 10 with 1,076 apartments.
Prague 4 is in fourth place with 1,044 apartments. Sales of new apartments in Prague 5 have fallen significantly by 29% during the past year and Prague 10 shows a rise of 15% in sales. Prague 10 has experienced a very large rise compared to 2010, as a result of a supply of particularly low-cost apartments in this area.
Map of Prague’s quarters – click on the picture to increase the size.
TYPE AND SIZE OF APARTMENTS
The greatest demand in Prague is for 2 + kk (two rooms with kitchenette) which account for about 41% of total sales. In second place is the sector of studio apartments and in third place 3 + kk apartments. As usual, the bigger the apartment, the lower the price per square meter.
BANK FINANCING
At present the Czech national bank’s interest rate is at one of the lowest levels ever and it pays to take out mortgages for real estate purchase. Israeli citizens can receive mortgages for real estate properties for up to 60 percent of the price of the property subject to proof of repayment ability. By comparison, a Czech citizen living in the Czech Republic can receive up to 90 percent finance on a residential property. Interested in further details about real estate in Prague? We are here to help you – please contact us now.
