Housing is getting expensive. According to experts, we should not delay the purchase of property.
Interest in acquiring one's own housing will continue to grow this year. The highest demand will again be in Prague, Brno and the surrounding cities. However, this can also lead to further price increases. Experts therefore advise not to hesitate with the purchase of real estate.
The development of the apartment market this year will be marked by a long-term problem that plagues the entire sector. Insufficient supply of apartments on the market, which is a result of inadequate construction, will probably screw up housing prices to new records. Anyone interested in a residential property should therefore hurry.
Growth of construction costs
In addition, there is an increase in the cost of materials and labor. And it's in a situation when the market is experiencing a construction boom. Last year, developers sold only 7800 new apartments in Prague, which was 8.3 percent more year-on-year and 350 apartments more than in the previous record year 2021. But the housing market in Brno or Olomouc is also doing well.
For example, the Central Group company currently reportedly has around 3,200 apartments under construction. However, the company recently decided to take a step that is not common. It is postponing the start of all its new projects by a year. The reason, it says, is the "unhealthy overheating of the construction market."
"The hysterical increase in costs of construction work and materials has recently significantly increased the prices of new apartments for buyers. But we don't want that. It is necessary to cool down the entire construction market with a "wet rag on the head" and bring it back to normal,"
LP-Life founder and general director of Central Group Dušan Kunovský wrote.
The developer is thus picking up on the situation that was here three years ago. Then, due to high construction costs, he postponed the start of construction of two of his major projects.
"At that time it was a shock for everyone and they wondered why we were doing it. But within 3 to 6 months, the whole market followed us. And after a year of quieting down and "cooling off" the construction market, we were again the first to start major new construction,”
Kunovský looks back.
Central bank to tighten limits
Another one to react to the current situation is the Czech National Bank. It now recommends that banks tighten limits for investment property purchases from April 1. The recommendation applies only to newly granted loans. An investment purchase, according to the central bank, is when the mortgage applicant is buying a third or subsequent residential property or is acquiring it for rental purposes. In such a case, banks should require a maximum ratio of mortgage loan amount to the value of the pledged property (LTV) of 70 percent and the maximum amount of the total debt of the mortgage applicant in relation to his annual income (DTI) should be at most seven times. The limit settings for properties intended for their own housing have not changed.
According to Jakub Seidler, a member of the banking board, the described step concerns a relatively small part of the mortgage market. Nevertheless, it definitely pays off not to hesitate with the purchase of property.
"Investors know that they now have the last chance to get favorable conditions. More personal money will be needed for mortgages on investment property and the bank will more strictly assess income. In addition, each bank defines investment property differently. For some, it is the second apartment for rent, elsewhere up to the fourth. So it may also affect people who do not expect it. Anyone who wants to buy should act now. The mortgage is still a great tool,"
Elena Jakubovič, the founder of the company Y&T Luxury Property, explained to the editorial staff.
Further opportunities
An interesting opportunity this year may be older housing that has undergone reconstruction. Many investors, due to current conditions, prefer to buy older houses and apartments and give them a new coat. The value of such properties, which are also located in attractive locations, usually increases. Their functionality, long-term sustainability and low energy demand are important.
A significant chapter also represents the segment of mountain properties, which records a mild, but stable increase in demand. An increasingly sought after parameter is the possibility of their year-round use or the benefits of subsequent rental. The location is crucial. Whether on the edge of a village, near a forest, or near other leisure infrastructure.
Expert's word
So, what types of property will be of most interest this year?
"This year, in the segment of more affordable housing, the demand will be driven by smaller and practical one and two-room apartments with quality layouts in good transport accessibility. The premium and luxury segment is driven by quality and limited supply, the fastest selling are exceptional and realistically priced properties in top locations - with a terrace or view, parking, privacy. In both segments, the specific location and condition of the property ultimately decide. If a person hesitates for a long time, the best offers will slip away from him,
Elena Jakubovič concludes at the end.
Sources: author's article, own questioning, Y&T Luxury Property, Trigema, Skanska, Central Group
