Real Estate News, Reviews and Investment
Article: Although stagnant so far this year, there may some prospect for growth in Czech property in the second half of 2013.
2013 should see flat property prices in the Czech Republic, or a miniscule growth at the very best. The first part of the year should see continued declines with buyers taking advantage of low interest rates (should the situation improve).
A look back at 2012
In predicting the outlook for 2012 for real estate in the Czech Republic, it was expected that, overall, Czech property prices would decline by around 4%. However, the decline for the first 3 quarters was only around 2%
There may be several reasons that the decline in the Czech market was lower than expected:
1. There was an expectation that developers would stop holding out for higher prices. Though there were some pre-sales at low prices, developers did not offload existing inventory in a fire sale.
2. There was also an expectation that the holding companies of Czech banks (most of which are Euro zone banks) would withdraw capital from their subsidiaries. As a result, lending criteria were expected to be much more stringent. The withdrawal did not happen, though, and the European Union has not guaranteed that the banking system would not be destabilized.
A major negative factor was the decrease in real wages (wages adjusted for inflation) over the first 3 quarters of 2012.
The outlook for 2013
The fall in housing prices made residential real estate more affordable.
The crisis in the Euro zone means that the average consumer is reluctant to undertake large investments, such as property. Once the situation improves, thoughthere is bound to be higher investor confidence.
The economy looks to be in better shape than the neighboring countries and unemployment continues to look relatively good.
All this indicates that housing supply is going to tighten, which should have a positive impact on housing prices.
The bottom line
In spite of flat prices in 2013, there is the possibility of growth in the latter half of the year, which should offset some of the declines.