Real Estate in the Czech Republic 2020-2021. Seven Trends
January 18, 2021
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The Czech Republic was one of the first countries in Europe to close its borders and establish a lockdown. The shock of the quarantine was short-lived, restrictions were eased in May, and demand for housing has recovered since. Still, the year was not easy: some sectors collapsed, others soared, and not without pleasant tax new. Read an overview of the main real estate trends in the Czech Republic to know what to expect in 2021.
1. The housing shortage in Prague is getting serious
At the beginning of the quarantine, many analysts worried that the real estate market would freeze for many months due to travel bans and unclear economic prospects, transactions simply would not be carried out. The fears were unfounded. Already in May, buyers became more active.
Even a full transition to digital was not needed. In the rental market, online views took root, but buyers still preferred to come in person, observing protective measures. However, the infrastructure for remote sales in the Czech Republic has been created. All processes – selection, purchase, payment, registration of property, leasing and income generation can be carried out without buyer’s personal presence, which was used by foreigners in 2020.
Sellers and buyers, realtors and lawyers, notaries and banks have adapted to the new realities in a couple of months. It was more difficult for developers.
The housing shortage in Prague has been forming for years. The key reason is the complex and lengthy process of obtaining construction permits, which prevents developers from increasing volumes. The process from the moment of purchase of the site to the start of the project can take more than five years. This is not an exception, but the norm.
In 2020, the authorities finally decided to deal with the problem. On August 24, the Government approved a new law on construction activities. Among the key points are the consideration of construction documents by one department, fixed deadlines, measures against the inaction of officials and the principle of appeal, according to which a higher authority will no longer be able to return the case for review.
It is expected that the law will come into force in the spring of 2021, but some points will start working from 2023.
3. Abolishment of the tax on the purchase of real estate
Good news for future owners of houses and apartments in the Czech Republic: in 2020, the tax on the purchase of real estate was abolished here. Previously, the buyer had to pay the state 4% of the value of the property, now you can save on this.
Changes has only affected the secondary market. New buildings are not subject to this tax. The cost of new housing already includes VAT, for the payment of which the developer is responsible, that is, the buyer does not need to transfer anything over the price.
The law will be retroactive and apply to transactions concluded from December 1, 2019. If the tax has already been paid for the completed purchases, the funds will be returned.
Děčín, the Czech Republic
4. Mortgage rates have crept down
Mortgage is the main driver of the real estate market in the Czech Republic. In 2017-2019, banks sought to tighten the conditions for issuing loans to curb the growth of housing prices. They raised the rates and the amount of the first installment, put forward more requirements for borrowers. But in the pandemic this practice was abandoned. The demand for mortgage products immediately increased.
According to Fincentrum Hypoindex, in November, the average mortgage rate in the Czech Republic reached the lowest since March 2017 – 1.98%. The total amount of loans issued for the month was €1 billion, which is the highest figure in four years.
5. House prices continue to rise
All of the above explains why the pandemic did not affect the value of real estate in the Czech Republic: prices continued to rise. According to Hypoteční banka, in the second quarter of 2020, apartments rose by 7.3%, houses - by 6.5%. And since 2007, housing prices in the Czech Republic have increased by 70%.
Examples of real estate in the Czech Republic
242 250 €
Flat in Marianske Lazne, Czech Republic
93 sq.m
Czech company Developerské Centrum is offering you this flat placed in Mariánské Lázně for sale. This flat 4+kt in very good condition provides 93 m² of usable space. Property is in personal ownership. Balcony is also part of the property. Place is furnished, located at 2 floor. Your new flat is nearer than you think, send message to...
TSentr Nedvizhimosti Marianskie Lazne
923 200 €
Flat in Prague, Czech Republic
242 sq.m64
Spacious apartment in Prague 2 for sale. It has 5 separated rooms + apartment has 2 terraces (20 sq.m.). Major repairs took place in 2007.
You have a great opportunity to buy a perfect apartment in the Czech Republic, Prague 2 for living, renting out or invest in Czechian real estate with high return on investments.
Mercury Group
2 500 000 €
Villa in Prague, Czech Republic
1472 sq.m
Czech
Republic 40 km from Prague
Modern villa in a park area
Beautiful modern villa in a very picturesque corner of the Czech Republic just 40 km from Prague (30 min by car to the center of Prague).
The infrastructure of the district includes all the facilities necessary for permanent residence: schools, kindergartens, shops,...
INDOM
5 600 000 €
Castle in Prague, Czech Republic
4000 sq.m
Czech
Olomouc, 250 km from Prague, 80 km from Brno
Castle in the Eastern Czech Republic
An ancient castle 25 km from the city of Olomouc in the eastern Czech Republic.
The first written mention of the castle dates back to 1356.
The building has been completely renovated with the preservation of the facade and...
INDOM
160 243 €
Flat in Marianske Lazne, Czech Republic
42 sq.m
Czech company Developerské Centrum is providing you this flat placed in Mariánské Lázně for sale. This flat 2+kt in after reconstruction condition provides 42 m² of usable space. Property is in personal ownership. Place is partially furnished, located at 5 floor. Your brand new flat is closer than you think, arrange appointment with Developerské...
TSentr Nedvizhimosti Marianskie Lazne
147 874 €
Flat in Marianske Lazne, Czech Republic
46 sq.m
Our company is delivering you this flat located in Mariánské Lázně for sale. This flat 1+1 in after reconstruction condition provides 46 m² of usable space. Property is in personal ownership. Balcony is included. Place is partially furnished, located at 2 floor. Your brand new flat is nearer than you think, send message to Developerské centrum...
TSentr Nedvizhimosti Marianskie Lazne
208 046 €
Flat in Marianske Lazne, Czech Republic
72 sq.m
Sale of an available 2+kk apartment (3+kk is also possible in the case of minor renovations) within the development project Rezidence FERDINAND, which is located at the end of Zeyerova street in Mariánské Lázně. The subject of sale is an apartment unit with a total floor area of 72.32 m2, which is located on the 3rd floor of a new apartment...
TSentr Nedvizhimosti Marianskie Lazne
78 000 €
Flat in Teplice, Czech Republic
71 sq.m311
Rental property
Sale of real estate in Teplice, Czech Republic.
The apartment, (private property) occupies the 1st floor, 2nd floor of the house, 71 sq.m. Furniture (antique furniture set), all household electrical appliances. Dining room and kitchen 16 sq.m. Bathroom 14 square meters. Yard, sauna, barbecue, front gardens, parking for cars and outbuildings,...
Prague is a tourist city. And many property owners have benefited from this for years, renting apartments for daily rent. In 2020, this sector of the market had the most difficult time. According to statistics, the tourist flow to Prague collapsed by 94%.
7. Customer priorities have changed
The logical consequence of the collapse of the tourism industry was a decrease in requests for the purchase of apartments for daily rent. However, this does not mean that investors have disappeared from the Czech market. Thanks to low loan rates and ever-rising housing prices, many people are trying to keep their savings in real estate, counting on income from long-term rentals and property capitalization.
