The years of continuous growth in the housing market are coming to an end

Prague - The domestic apartment market is experiencing a turning point this year after years of continuous growth. Demand for new, cheaper apartments has noticeably decreased, apartment prices in some areas are stagnating, market rents are declining in some places, and the number of granted mortgages is decreasing. This is according to a survey conducted by ČTK among experts in the real estate market.
    "In the same period last year, property prices were rising, almost irrespective of location," said Miloš Motoška from the real estate company RE/MAX. According to him, the trade in older apartments was still brisk at the turn of the year.
    "In the spring of this year, demand somewhat decreased, which led to a peak, and even a decrease in prices for certain types of apartments or apartments in certain locations," stated Motoška. According to Jitka Horňáková from Devo Group, in the case of older apartments, supply is already beginning to exceed demand today, and prices are expected to continue to fall.
    "Apartment prices were long overvalued in relation to the overall purchasing power and average wage of the middle class. Naturally, this is leading to what had to happen: stagnation or even a decrease in apartment prices in some areas," said Radim Koliba from Hot Reality Plus to ČTK.
    The trend towards price stagnation was also confirmed by other experts. "The prices of 'secondhand' apartments have increased by five percent compared to August of last year already in the spring and have not continued to rise," said Petr Vosmík from Českomoravská realitní.
    According to Motoška, a similar situation as with older apartments has arisen in the case of new buildings. This is also confirmed by other real estate experts. Demand for new apartments in the lower segment, under 45,000 crowns per square meter, which simultaneously forms the majority of the offering from developers, has reportedly significantly collapsed since the beginning of the year.
    "It is undoubtedly clear that the existing overvalued property prices are no longer sustainable. A decrease in prices can therefore be expected depending on the attractiveness of the location and the attractiveness and competitiveness of individual projects," stated Horňáková.
    According to experts, the years of continuous growth are also over in the case of market rents. "We cannot expect that market rents will increase dramatically. Rather, we can speak of stagnation or a decrease," said Koliba. According to Motoška, ongoing deregulation is pushing rental prices down. However, other experts are more skeptical about the impact of deregulation. "Due to the relatively small percentage of apartments with regulated rent, the deregulation process will not significantly influence the level of market rent," pointed out Petr Višňovský from Lexxus.
    According to Motoška, the excess of rental properties is also caused by the trend of acquiring a second or even third apartment. "Although market rents are slightly declining, it must be said that investments in real estate are still considered by me to be the most effective in terms of return on investment and risk level," said Motoška.
    In the first half of this year, according to data from the Czech Statistical Office, 21,931 apartments started construction in the Czech Republic, which is 14 percent more than in the same period last year. The number of completed apartments increased by nine percent to 16,427 apartments.