Low mortgage rates drove the market up, real estate agencies are pleased

Source
Filip Sušanka
Publisher
ČTK
31.12.2014 19:00
Czech Republic

Prague

Prague - Historically low mortgage interest rates this year and low prices of apartments and houses have led to a revival of the real estate market in the Czech Republic. This was stated by representatives of real estate agencies contacted by ČTK. Interest in purchasing property, according to them, will be higher even next year.
    "The real estate market this year has undoubtedly been influenced by historically low mortgage interest rates. As a result, the monthly mortgage repayments have fallen below rental prices. People realize that this is currently the most ideal time to buy apartments, also due to a relatively large supply of apartments that keeps prices at a reasonable level," said CEO of Century 21 Lubomír Milek.
    These two factors were also decisive this year, according to the sales director of RK Sting Michal Kresta. "The revival in the real estate market is noticeable, partly caused by the decline in property prices to an attractive level and partly by the still falling interest rates on mortgage loans," he stated.
    Director of Lexxus Peter Višňovský added other reasons why demand for properties increased this year. "The revival is caused by the accumulation of demand during the 'dead' crisis period of falling property prices, when the market significantly slowed down," Višňovský warned.
    CEO of Maxima Reality Vladimír Zuzák noted the great interest from buyers. "On average, we can say that demand has matched supply, or even slightly exceeded it in some cases, similar to what was observed before the economic crisis," he said.
    According to the executive director of Re/Max Hanuš Němeček, the Czech real estate market has definitively ended the phase of downturn this year. "Property prices in selected locations are rising, while in others at least stagnating. Low interest rates and reasonable property prices are increasing demand, and people who have been postponing the decision to invest in property are now doing so," he stated.
    This year, real estate agencies have also noticed a greater interest in agricultural land. "If the price is not excessive, it is possible to find a buyer very quickly, whether for large plots in the range of dozens of hectares, or scattered parts with areas up to one hectare," Kresta said.
    People are also more interested in other types of land. "In addition to agricultural land, we have seen increased demand for forested areas or ponds. Some of our agents specialize specifically in this real estate segment," added Century 21 director Milek.
    General Secretary of the Czech Association of Real Estate Agencies Jan Borůvka tempered the optimism of his colleagues, stating that this year was not particularly groundbreaking. "In terms of new construction sales, we are seeing a slight increase in prices, which may not be the best news for buyers, but it signals to us the 'healing' of real estate transactions," he pointed out. He noted as positive that buyers are increasingly interested in energy-efficient properties, with some willing to pay extra for them.
    According to representatives of real estate agencies, positive developments are expected to continue in 2015. "As for the coming year, I am generally optimistic. Because I am not afraid of a sudden increase in mortgage rates, it can be expected that next year will still be a very favorable time for real estate investments. This will manifest in the market with higher demand and a gradual increase in property prices across the board," expects Němeček.
    However, Zuzák warns of the anticipated efforts by the Czech National Bank to more strictly regulate 100% mortgages or the introduction of a so-called mortgage cap, which could affect the interest of buyers without their own funds. "But our experience suggests that buyers will seek the missing funds from other types of loans; it will not deter them from making a purchase," he added.
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