What are the expectations of real estate market experts? The prices of cottages will drop sharply

In the residential real estate market, buyers will be pulling for the longer end in the near future. Less energy-intensive apartments and those located in sought-after locations will always withstand downward pressure better than atypical or energy-intensive units.

Purchases of new apartments in Brno have now started to be postponed not only by people who were thinking about owning their own home, but also by investors. But there is a lot of inertia in prices. Over the past six months, the price of sold apartments in Brno has remained at the level of 130,000 crowns per square meter. The location and technical condition/equipment of the apartment will play a greater role in the price. For example, you can get a free kitchen or a subsidy for an expensive mortgage with the apartment. The average price of a new apartment currently offered in Brno is 7.2 million crowns and is eight percent higher than a year ago.

Top locations will keep their prices. On the contrary, they fall in older properties, panel houses and energy-intensive family houses. For new buildings, development will depend on how much is built. Developers stopped a number of new projects.

I expect a drop in prices for cottages and weekend properties. Their prices will be put under pressure by expensive energy prices and people’s caution. The exception is modern apartments in mountain resorts.

Rents will continue to rise. But the payment morale of tenants will deteriorate.

Apartments will be owned even more by real estate and foreign pension funds.

We expect a more significant recovery in people’s demand for apartments, i.e. a reduction in mortgage rates and thus a greater availability of mortgages, at the earliest in 2024, when the drop in interest rates could already be more significant and, in conjunction with a large supply and low property prices, a new mortgage boom may occur.

Bid prices are now often illusory. Advertisements for the sale of an apartment, which keep the price at the level of the end of summer, often have only low units of interested parties today. Sellers who have reduced their price by at least five percent compared to September have twice as many interested parties.

A cottage as a store of value makes sense now if it was bought before 2019. One of the biggest price drops can be expected for holiday properties. Only unique objects or facilities with low operational requirements, which can be used all year round, retain their value.

We expect a price reduction of up to a third for older village houses, cottages in settlements, land in gardening colonies or villas. Especially in small towns and villages, a trend of cottages offered for long-term rental could develop.

Although a mortgage may seem disadvantageous now due to high interest rates, the situation is not black and white. If the family can afford a mortgage, there is no limit to financial possibilities and there is nothing to wait for when the property they want appears on the market. It makes sense to bet on a short-term fixation and refinance at the first opportunity. It is highly likely that in two to three years, mortgage interest rates will be significantly lower and demand-driven real estate prices will rise again.

Some apartments are already starting to become cheaper. Investors will start buying more of them in about half a year. Developers are trying to keep prices down. They cannot discount because of the rising prices of materials and land.

Year-on-year interest in apartment rentals increased by more than sixty percent. It can be assumed that this will be the case until the summer.

A sharp drop in the demand for cottages and cottages. The supply has increased significantly, but the prices have not fallen much yet. The discount will most likely take place after the winter. However, this still does not apply to tourist-attractive locations. In Špindlerův Mlýn, apartments are sold for 275,000 CZK per m2, and yet they bring income to investors.

Prices are definitely not falling for land and commercial buildings, where there is still interest in warehouse and production space.

The mortgage market is not expecting a boom this year. Banks will look for ways to stir up the market at least a little. Already before the end of last year, some banks started taking over mortgages. However, this is only a small push that will not have a significant impact.