“We can feel a real estate market recovery,” says Filip Šejvl, Partner in Philip & Frank real estate company.

6. 3. 2024

“Since the middle of 2023 we have seen more activity on the part of customers. The focus is still on rental housing but there has been an increase in demand for properties to buy. As a result we are getting back to the level before the 2021 real estate boom,” adds Filip Šejvl of Philip & Frank.

One of the essential factors is the decrease in mortgage loan interest rates. The average rate decreased from 5.65% to 5.54% in January. Moreover, at the beginning of February, Czech National Bank cut repo rates by another 0.5% and it can be expected to continue cutting interest rates with regard to the decreasing inflation. Interest rates are expected to lower to 3%–4% in the medium term, which should also boost the real estate market.

How have decreasing interest rates influenced the number of mortgage loans provided? For example, in January 2024, according to the Czech Banking Association’s “Hypomonitor”, there was a 99% year-to-year increase in the number of mortgage loans (however, this is a comparison to the very weak beginning of 2023).

It can also be expected that higher demand for mortgage loans will influence the prices of properties, which are likely to increase by up to 5% as predicted by the Czech National Bank’s latest financial stability report.

Just for the record: 4,000 new flats were sold in Prague last year, which is a 29% increase in comparison with 2022. If we consider the Czech Republic as a whole, there was an almost twofold increase in the sale of new houses while with older flats and family houses the increase reached 49% and 45%, respectively. However, that is a comparison with 2022, when there was a steep decline in the real estate market.