Even earlier this year, it was quite common to sell an over 3 kk apartment in Prague in its original condition for 7 million crowns. In the fall, practically no one is interested in such an apartment. People come with cash and offer 5 million crowns. Reducing the price by 25 percent to sell is already a common practice today, says real estate agent Tomáš Kučera.
The price drop is much more pronounced than publicly discussed. Today, true price declines are quite common at the 30 percent level. People only learn about it late thanks to the land registry data. While professional real estate agents recognize the real state from everyday practice almost immediately.
The prices of the most luxurious properties are also going down. It is a completely different type of interested party, but in the end the same impact on the real estate market. People interested in housing development apartments are refusing to pay last year’s prices because they are aware of how difficult it is to get money to finance housing today. They hardly get a mortgage, and the more they collect and of course they drive up the price.
When it comes to luxury apartments or houses worth tens of millions of crowns, those interested in such housing are not dependent on bank financing. They have so-called cash and have often earned it through their managerial and entrepreneurial skills, they are well oriented and know the value of money. As a result, they push the price similarly to people interested in housing developments. Their purchase offers very often start at 20% less than the owner’s asking price.
In practice, it seems that if a luxury apartment or house is sold today, the price is tens of percentage points lower. Owners who reject the new state of the property market then keep bidding and offering their property and more and more offers are added. We call them camps. In other words, what you see listed on the internet today is mostly just wishful thinking by homeowners. The longer they wait, the less they will get for their property. Moreover, the decline in prices will continue and will definitely not pass within a quarter.
Pricing for development projects is also a hotly debated topic. I personally bet my shoes that they will eventually drop in price as well. Of course, now we hear from all developers that they will not lower the prices. Have you ever heard the phrase from a developer: don’t buy now, wait another three months, then we’ll have to lower the price?
As I already said in 2018, the real estate crisis is a periodically recurring phenomenon and, with exceptions, practically no segment can avoid it. And if the developers do not announce a general price reduction for the project, it will suddenly happen, for example, that you get a free kitchen block, two parking spaces for the price of one, a higher standard for the price of a lower one, and so on . It is therefore due to a discount, which doesn’t look like a discount on the outside.
The real estate crisis is here, and its consequences will be fully felt in a few months. But it already has a practical impact. And it does not escape, with exceptions, any segment of the real estate market.
