By January 01, 2014
Czech Republic home prices and sales transactions have been in a downward direction for years but new data suggests the decline in prices may be tapering off. The Czech Statistical Office (CZSO) reports the price for apartments increased 1.3% in the third quarter of 2013 and house prices are expected to rise about 3% in 2014.
The news is not so positive for new construction looking at year-on-year data from the CZSO. In October 2013 construction output decreased by 1%. Planning and building control authorities granted 22.6% less building permits and the approximate value of those permits decreased by 21.7%. Housing starts declined by 34.4%, and the number of completed dwellings was down by 16.5%.
While the recession continues in the Czech Republic, the degree the economy is contracting has slowed. The economy contracted by 1.3% during the Q2 2013, an improvement from the 2.4% year-on-year GDP decline in Q1 2013. Earlier this year the International Monetary Fund (IMF) said it expected that Czech economy to stop declining and grow by 0.3% in 2013 and grow by 1.6% in 2014. The Czech National Bank downgraded its outlook for 2013 throughout the year, but consistently has projected growth for 2014.
The decline in the Czech housing market is partly being attributed to less interest by foreign buyers who previously bought for investment purposes. A greater proportion of luxury buyers in the Czech market are now either Czech or Russian, according to one area firm dealing in high-end properties.
The decline in a foreign investment is also felt in the rental market. Companies are no longer renting apartments for expat employees, causing a decline in the investment into income-producing rental properties. According to information from the Global Property Guide in May, rental yields were ranging from 2.95% to 4.51%, depending on size with smaller apartment producing higher yields.
Credit Suisse's Global Emerging Market Equity Strategy report (December 2013) forecasts growth acceleration for the Czech Republic based on leading economic indicators. The report cites improving manufacturing orders, trade surplus, growing consumer confidence, retail sales and real wage growth.
Czech real estate professionals affiliated with WorldProperties.com are members of The Association of Real Estate Offices of the Czech Republic.
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