The Czech Republic’s Home Buying Frenzy

The real estate market in the Czech Republic is set to experience some significant changes this year. After a lull last year, the construction of apartments and houses is expected to revive. Developers plan to bring more new buildings to the market than last year. Notably, indications from the beginning of the year suggest that people’s interest in buying property is rising, prompting firms to plan an increase in real estate prices. Two-thirds plan to increase prices by almost five percent on average.

One significant factor contributing to this uptick in interest is the decrease in interest rates and a more stable economic situation. According to Michal Vacek, the CEO of the analytical company CEEC Research, interest in real estate will continue to grow in the capital city and across the entire Czech Republic. Their study, based on interviews with 51 development firms, revealed that 61 percent of respondents plan to increase prices by an average of 4.6 percent.

Despite the anticipated revival in construction, prices are expected to rise. Developers predict an increase in the supply of apartments and houses across the Czech Republic in the first half of the year, with an estimated rise of 2.4 percent. The second half of the year will see a 2.8 percent increase. However, Prague will see a slightly faster influx of apartments and houses, with gains of 2.6 percent and 3.2 percent, respectively.

The surge in new construction is being driven by increasing buyer interest. Projects that had been delayed due to low demand in 2023 will now be coming to the market. CEEC Research’s study indicates that demand this year will grow faster than supply. Across the Czech Republic, it is expected to rise 3.9 percent in the first half of the year and 4.7 percent in Prague.

Not only cheaper mortgages but a lower VAT rate, which dropped from 15 percent to 12 percent for a large part of apartments in January, increased interest in buying properties. The owner of the most prominent Czech developer, Central Group, Dušan Kunovský, is among those who believe this. Experts estimate that to meet demand, at least 10,000 apartments per year would need to be built just in Prague, a target that has been difficult to achieve in the long term.