Over the last month we have seen steady movement on the Czech real estate market. The first quarter of 2010 has reported a decrease of 1.3% overall in property prices over the year before. Initially we had been expecting a jump in demand for real estate due to some pent-up demand being fulfilled in second quarter of 2010 but there have been a few factors which have squashed this. Let’s go through them.
1. General Elections – The general elections (May 28th and 29th) have been weighing on people’s minds. Definitely it appears that there will be a change in government and perhaps by the time of your reading this there will already be a decision. Almost positively it will be a coalition.
I know readers from the UK will understand what an unsettling effect this can have because of the recent elections there. Most parties have included an increase in taxes in their policies. It is inevitable because of the current budget deficit. Because of this tax uncertainty, many businesses are putting off hiring, salary increases, etc. until they know which party will be elected. This all filters down to the consumer and has the same affect on them. We are feeling the effects of this in both the Czech real estate and rental markets.
2. Uncertainty of jobs – With unemployment at around 10% and many analysts forecasting for more layoffs in the future, most potential buyers are unsettled and would rather wait until there is a stronger feeling of security.
3. Banks Holding Strict Czech Mortgage Conditions – Our expectations had been that banks would begin easing lending conditions for both Czechs and foreigners but this has not been the case. The conditions which most banks implemented in the first half of 2009 when fear of a financial collapse was highest have been held through to present.
On a positive note, we have seen signs that the economy may be recovering at a quicker rate than initially expected. Estimated GDP growth for 2010 has been gradually increased by different organizations over the last months.
Updated/Aktualizováno: December 1, 2014,
