Original article by Jana Kneshke in ‘Moje Penize’ – Summary into English by Pavel Parizek
We all probably hear a lot about how the crisis appeared and what it meant and means for us, but the most asked question is when it will finally end or are we really behind the crisis?
Moje Penize magazine
Let’s have a quick look to the USA, as it is still the most interesting country regarding the crisis. A further fall of the American market with the properties started the international mortgage and financial crisis and based on the numbers it is getting back again. Since June 2010 president Obama’s steps regarding the property market are not applicable anymore, which means that the demand for existing houses is again low (even though housing starts are more than at the beginning of the year). The fall of the property market is about 7% in comparison to last year and the number of building starts even 32.8%. All this means that the crisis looks like a W (first big fall, then small raise and then again fall –in the end an upward trend).
Nevertheless the situation in Czech Republic is different; we do not have so many of the American kind of mortgages so the crisis results are not so huge as in UK or USA. A lot of people have already paid out their mortgage and a lot of young people inherited their flat from their parents. The fall in last 2 years was between 10-30%, dependent on the location and condition of the property.
What about now?
The panel flats (built during Communist times) are about 30% cheaper than their peak. Because there is only weak demand, it is possible to buy most flats (even non-panel flats) about 20% less than the normal price (mainly large flats, because of the price and rentals possibilities, large flats are hard to rent). Most owners do not follow the crisis and still keep the price at the unreasonable level and still hoping to get the same price as before the crisis. So if you are not really persuaded that this is a good deal, then do not buy it. Some experts still believe in a fall of prices and they believe that the return to the peak prices could take even 2 – 3 years.
Interesting facts: The Center for European Policy Analysis made under the leadership of Eva M. Blaszczynski an analysis about the economic situation of the EU countries. How did the property market in the Czech Republic look like in 2009?
Before the crisis, the main city Prague was in top 50 most expensive cities in the world. The average price of the Prague properties had increased in last 5 years about 130%, but since the crisis started there was a fall about 30% overall.
The crisis also affected the lending criteria – it is hard to get a Czech mortgage. However the expectation for the future looks positive. Low level of the debts and quite reasonable dividing of the state financial budget makes the Czech Republic a stable place and gives a good mood about getting over the crisis.
Updated/Aktualizováno: December 8, 2014,
