The coronavirus crisis is not likely to cause a fall in property prices in the Czech Republic, the Association for the Development of the Property Market said this week. However, a slowdown in sales can be expected, the group said.
A palpable increase in available apartments intended for long-term rental may result in a short-term decline in prices for long-term rents, said the president of the Association for the Development of the Property Market, Zdenka Klapalová.
However, given the acute shortage of flats, especially in Prague, the prevailing view is that while there will be a certain decline in demand this year, this will most likely be a temporary situation, Ms. Klapalová added.
According to data provided by development company Trigema, the number of apartments available for long-term rentals in the capital rose by no less than 71.8 percent year-on-year at the end of the first quarter of 2020 to reach 12,371.
This was the biggest jump in the last four years and followed a quarter-on-quarter increase in available properties of 86.1 percent.
Zdenka Klapalová said her association did not expect a decline in sales prices but did foresee transactions becoming protracted and pressure for discounts on offer prices.
Demand will weaken as people put off buying property for some time due to worries and uncertainty, Ms. Klapalová said.
Legislation is a major issue, according to Ms. Klapalová, with slow and complicated approval processes impacting virtually all areas of the real estate market.
Apart from developers, who are unable to react flexibly to market demand, it is ordinary people who are feeling the inadequate supply of new apartments most sharply – and this has further fueled price rises, she said.
The Ministry of Regional Development is preparing a new construction code aimed at shortening and simplifying the bureaucracy surrounding building work.
Some analysts believe the construction sector, which is not so dependent on foreign trade, could become a motor of economic recovery after the measures against the spread of coronavirus have ended.
However, the planed legislation has many critics. A frequent complaint is that it will benefit developers rather the public interest, while some even say it is unconstitutional.
The Czech government aims to have the new law in place by the middle of 2023.