Developers are competing further in discounts on apartments

Prague - The demand for new apartments is still not approaching the levels of previous years. Real estate companies are thus continuing to try to stimulate buyer interest and simultaneously overcome competition with various discounts and bonuses. This follows from findings by ČTK among development firms.
    For example, Central Group announced blanket discounts on all apartments and houses for the summer. Discounts from Finep on some apartments offered until Friday in a promotional offer exceeded two million crowns. The company Ekospol, on the other hand, offers discounts exceeding 600,000 crowns in some projects. At the same time, they assure that if a buyer finds a comparable apartment in Prague for a lower price, they will match that price and additionally discount another 50,000 crowns. Skanska Reality lures with a voucher for apartment furnishings worth 30,000 crowns for anyone who has already bought an apartment from them and refers another buyer to the company.
    However, the announced discounts often do not apply to all apartments; in many cases, the offers are time-limited or also limited by the type of transaction. For example, a ten percent discount from Central Group will only be available to buyers of unfinished apartments if they pay the price from their own resources within 30 days of signing the contract.
    "Although high birth rates and increased numbers of marriages as other factors of demand for private housing continued to persist, the consumer confidence indicator regarding the future published by the Czech Statistical Office began to significantly decline, especially in the second half of 2008," said Drahomíra Dubská from the CSO regarding the reasons for the drop in demand for apartments. The worse availability of mortgages is said to have further exacerbated this situation.
    In recent years, according to the expert from the CSO, there have been two periods in the Czech Republic where the increase in apartment prices was close to what is known as a price bubble. The first significant rise in purchase prices, not just those from advertisements, occurred before entering the EU in 2002-2003. In each of these years, housing prices increased by more than a fifth. The second period of price boom can be marked by the years 2007 and 2008. In 2007, apartment prices rose by nearly a third, while the following year it was around 18 percent. The engine of price growth in the second period was economic growth and household optimism towards the future.
    The current figures on purchase prices for this year are not yet available from the CSO. However, even its data on offering prices indicate a decline of 5.5 percent for the second quarter.