Flats in short supply in Prague and Brno
Low mortgage rates have led to high demand, but that may change
The number of flats available on the real estate market is low due to demand, with some categories of flats in particularly short supply in Prague and Brno.
The strong demand for property has been caused by record low mortgage rates. Experts in real estate say the supply of flats is down 20 to 25 percent compared to the same time last year. The shortage in supply is also affecting houses and construction sites, and has extended to summer cottages.
Major real estate portals have seen a large drop in their offerings, dropping some 35 percent. The decline began at the end of 2015 already. The reason is that there is a growing trend for real estate agencies to list their properties on just one portal, rather than on multiple sites as they had in the past.
The main shortage is in small apartments, especially single-room and 2+kk flats in Prague and Brno. There is also a shortage of houses valued at up to Kč 4 million. While the level of demand for houses is the same, the supply has drastically fallen. There are currently some 25 percent fewer than there were in January 2016, according to experts.
Brokers are also increasingly turning to auctions to sell properties due to the demand. This can result in a higher price for the seller, by tens or hundreds of thousands of crowns, and a higher commission for the broker.
Some experts say that the situation could reverse in 2017, and the supply of flats could start to grow again in 2017. This is due to new restrictions from the Czech National Bank (ČNB) on the basic terms for mortgages. The changes will likely create a cooling off period at the start of 2017. The decline in demand may slow down the rise in property prices, according to experts.
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