This is a video of an overview of our 2013 Czech property forecast and a transcript of the whole video is below.
Link to our print version of the 2013 Czech Republic property forecast.
This is our 2013 Czech Property Forecast. We are going to move through fairly quickly if you would like to spend more time on the details there will be a link in the notes below with our print version of this. First of all let’s look at an overview of 2012. We had expected property prices to go down 4% during the year. The HBIndex, which is one of our most accurate measurements of what’s happened with property prices, showed that to the end of the third quarter it had gone down 2%.
We expect perhaps in the last quarter of 2012 for it to go down another 1%.
Some things that didn’t happen in 2012 that we kind of expected to. Developers didn’t fire sale their existing property. We had thought that the inventory was getting high and that they would do this and that this would really affect the prices, but it didn’t happen. We also expected that foreign owners of Czech banks would withdraw some substantial capital and that this would affect the lending, but this did not happen and the lending seem to be without any restriction. This is a concern because 90% of the banks in Czech Republic have foreign owners.
Text: factor 1
real wage decrease (–)
So what is going to happen in 2013? What are the big factors? One of the biggest ones we expect is the real wage decrease that we have seen. Real wage is the wage that the household takes home after inflation and you can see it that it has deteriorated and 2012 actually they took home less than 2011. This makes households really not secure about the future and not wanting to commit on a property purchase.
Text: factor 2
Record low interest rates
(++)
On a positive note we have record low interest rates right now and this is going to prompt a lot to step into the market if they were planning to at any time soon. So this is a very positive thing for prices.
Text: factor 3
eurozone crisis (–)
The eurozone crisis continues to affect the headlines. I am sure you have seen it yourself many times. These headlines are in English but also of course they are in Czech and when the household sees this it makes them not secure about the future and not willing to make commitments. This is a very negative factor we feel on the housing market in Czech Republic this year.
Text: factor 4
Overall economic strength
(+)
The overall economic strength in Czech Republic we feel is good in comparison to its neighbors. We look at things like the unemployment rate. It is quite low. This is from September 2012. As well GDP or Debt to GDP went up a bit in 2011 but still regionally it is very good, very strong and that bodes well for the future also of the economy.
Text: factor 5
real estate transfer tax change from seller to buyer (+)
There is a change in the real estate transfer tax. It is going to go – it is expected to go from the seller to the buyer. It is currently 4% and this is expected to change from being paid by the seller to being paid from the buyer. So in the second half of this year we expect there would be sellers who decide to hold of on listing their property until 2014 until this change and there would be buyers who want to buy in 2013. So we see the two conflicting forces having a positive effect in the second half of the year on property prices.
Text: factor 6
decreasing supply of new developments (+)
A big thing that we have seen is a decrease in supply of new developments. This is the number of dwelling units started. It has gone down substantially over the last 3 years and we feel that this is going to create a shortage which will put a pressure on the property prices as well.
Text: end conclusion
short term
(2013)
end conclusion
longer term
(2014/15)
So what are our conclusions? Because of all this, we feel that 2013 will see a 1% increase most of it coming at the end of the year 2014, 3%; and 2015, 4% as things continue to improve.
Text: MMXIII
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Updated/Aktualizováno: November 27, 2014,
