Prague property prices in 2016 continued to soar: http://www.czechpoint101.com/prague-property-prices-2016-q3-continue-soar/.
In this video Pavel Pařízek, director of CZECH POINT 101, discusses what has happened in 2016 with regards to Czech real estate and what he expects to happen in 2017.
What effect will the Czech National Bank's tightening of mortgage requirements have? Why are the number of new projects being approved affect forecasts for 2017? Pavel discusses these and other matters affecting the property market.
Here is a transcript of the entire interview:
Czech Republic property price forecast for 2017 and 2016 real estate overview
So, what do you expect in 2017, what will the market look like?
Well, we had really beautiful year in 2016 with regards to value of the properties. We have seen the properties increasing about 8-13% and we also think that it would be coming up next year as well little bit, but it would be influenced by many factors.
So, what are the factors?
Mainly I think it would be the mortgage situation in Czech Republic.
What does it mean?
Basically, up to know or month ago, you could take even 100% LTV mortgage. But since 1 November it is only possible to take 95% LTV mortgage and since April 2017 you would be eligible only for max of 90% LTV mortgage. That is the restriction from the Czech National Bank, so the market is not overheated.
Ok, and I have heard that there is some change in transferred TAX.
Yes, the transferred tax used to be paid primarily by the seller but again since this year the buyer needs to pay the transferred tax which is additional 4% that needs to be covered from his own sources.
And will it be possible to finance it through bank?
Some banks do offer it that you can take this 4% but still it could be up to 90% LTV mortgage. Which would mean that you would be only eligible for 86% LTV mortgage and then additional 4% it would be covered by the bank. And this would leave you with having 14% from your own sources that you would need to invest anyway.
And do you know about any other factors that you expect that will influence the market in 2017?
The big unknown is the Czech National Bank because we know that the Czech National Bank is buying Euros so the currency exchange rate Czech crown into Euro is above 27 Crowns but they announced that they should waive the restrictions in the half of 2017. If they do so, it may also influence the demand and the supply in the Czech Republic and how many foreigners would go and invest into properties which then may also influence the increasing or decreasing value of the properties.
Ok, we will see. And what about the properties that are still available on the market. Is there sufficient supply or not?
Well, there is currently very strong demand for properties and the Czech developers they are not managing to build the new development projects so fast so it is happening that the people are buying even older flats and the sellers that have really hard time two years ago to sell their properties for a decent price, right now are selling it for increase about 8-10%. So, this is one factor that would push the price a bit higher that we do not have so many available flats for sale.
Ok, so when you sum it up. It means that market will be steady or will rise or drop down...?
Well, we expect market definitely to go up. If I would be holding at a bottom then I would see at least about 4% but as we see it may go even around 6-7% next year.
Thank you for your thought.