Prague property prices climb but lag behind Brno and Zlin – 2015-Q1

Czech Point 101 May 21, 2015 @ 10:54AM

The HBIndex numbers for Q1 2015 confirmed that prices are solidly increasing. Flat prices increased over Q4 2014 by 1% and house prices by a more modest 0.5%.

Prague property prices broken out

In his comments Petr Němeček, CEO of Hypoteční banka which produces the pricing index, gave some insights on the gains. He said the highest gains were to be found in the Southern Moravia and Zlin regions. In Pardubice the prices went slightly lower. Prague property prices increased by 0.6%, which lagged behind Southern Moravia and Zlin.

‘Panelak’ apartments increased more than brick

Interestingly he also reported that there were stronger gains in the pricing of ‘panelak’ apartments (Communist era concrete panel buildings) than those with brick construction. We had previously expressed the opinion that the prices of these were too severely treated during the downturn and presented an opportunity for investors.

Strong interest in smaller units for rental

Petr Němeček, CEO of Hypoteční banka, also reported that there was strong demand for smaller rental properties. This was especially the case in the university cities of Prague, Brno, Olomouc and Plzen. This is a trend that has been going since 2013 as property is viewed as the investment of choice for many Czechs.

Property price graphs (click to enlarge)

The first is for flats and the second for houses. They include the combined prices of all of Czech Republic. Prague property makes up the majority of the index because of the volume of transactions that take place there.

Flats prices for 2015 Q1 including Prague property

House prices for 2015 Q1 including Prague property

With the major upward stimulus provided by ultra low interest rates and improving real wages, we expect 2015 to be a very strong year in Czech real estate. Read our 2015 Czech real estate forecast including what we expect for Prague property in 2015.

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