November 18, 2016 @ 7:20AM
Hypoteční banka released their HBIndex Q3 statistics showing Prague property prices 2016 Q3 continued to soar. Jihomoravský (Southern Moravian including Brno), Jihočeský (South Bohemian) and Středočeský (Central Bohemian) regions all experienced strong growth. In fact, it recorded the strongest growth in the last four quarters.
Apartment and flat prices
The rate of flat price increase year-over-year was 9.3%. The quarter-over-quarter growth was 2.9%.
Interestingly the rate of price growth for concrete panel apartments (typically from the Communist area) rose faster than the prices of apartments in brick construction buildings. Demand continued to be strongest for small apartments.
House prices continued their more moderate price increase with 3.9% year-over-year and 1.2% quarter-over-quarter.
Land prices continued to climb with prices posting an 8.2% gain over last year. Especially in the vicinity of the major cities, especially Prague, have the prices increased rapidly.
Why have Prague property prices 2016 Q3 continued to soar? Will it end soon?
Part of the increase is definitely because of buyers trying to get their purchase completed before the change in the payment of the real estate transfer tax. As of November 1st of this year the obligation to pay the real estate transfer tax (currently 4%) changed from the seller to the buyer. There is no real estate transfer tax on the first sale of a flat or house when it is newly constructed but it applies to each transfer following that.
This combined with the extremely low interest rates, rising real wages and the strong growth of the economy have all translated into a rising property market. With the economic horizon looking good in the short to medium term for Czech Republic we expect to continue to see rising prices.
In the major cities of Prague and Brno there has also been the problem that building permits are being issued very slowly. Because of that the number of newly built apartments on offer has really decreased. For example in Prague in August 2015 there were roughly 6500 new apartments being offered and the same month this year showed just over 4500.
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November 18, 2016,