Recently, around the world, the housing market has become a hotly debated issue in the context of the rapid rise in house prices. From 2000 to 2008, Czechia experienced a huge boom, with the
growth of buyer interest far exceeding supply on the market. Between 2009 and 2012, the economic crisis hit the real estate market. As a result, demand weakened significantly, with house prices also falling.
Following this slump in demand and prices, with owners losing up to 40% of the value of their properties in some locations, the market started to grow again in 2013. so you could say that the real
estate market has a cyclical period, which is repeated with period of approximately 8 years of growth and 4 years of decline.
Currently, demand is growing greatly due to people’s interest in saving their savings into conservative assets, as well as the overall economic situation in Czechia, where many people have
higher incomes and cant hus afford to buy better housing. The quality of housing is a major factor.
Many people are looking for more expensive and pleasant housing. Banks that provide low-interest mortgage loans account for a significant share of demand growth. These factors lead to an increase in demand, coupled with a rise in house prices, but what is worrying about this period of growth is that there is a large disparity between house price growth in the overall economy of the states.
The state’s economy is growing at an average of around 3% a year, while house prices are growing at an average of 7% a year. As a result, house prices in Czechia are growing twice as fast as the Czech economy. This leads to housing becoming more unaffordable.
In 2020, the market lacket foreign investors who had previously purchased real estate in Czechia. The reason demand for real estate is not falling yet is due to fear of further economic developments and inflation. That’s why most people save their savings more conservatively (in real estate). This is what they do because they see it as a safe, convenient investment and protection of their property.
This post was written by Veronika Pluháčková who was a research intern at Irish Mortgage Brokers in May of 2022