Probably all of us heard about Czech Republic. It is located in the heart of Europe. Obviously, the country is full of magnificent castles and other monuments of ancient architecture. This is a place of interest for millions of tourists from around the world.
Therefore, Czech Republic’s housing market can be considered a good option for foreign investors. Investments in the local residential property (which has always been in high demand) can generate decent profits.
Let’s have a closer look at the country’s housing market:
Czech Housing Market
Prague and Karlovy Vary are the most popular places for foreign buyers of Czech residential property. These two cities attract a lot of tourists every year. Despite the fact that the housing prices in these cities are higher than in other Czech cities, investing in the local housing market is beneficial because the market is more liquid. Obviously, after investing in local residential property, you can lease it, thereby generating decent profits.
Obviously, the Czech housing market is one the most diverse markets in Europe. Local realtors say that the most popular residential units are 2-room apartments. Such apartments sell like hotcakes because they can be further leased without any problems at affordable prices. The prices start from $ 2750 per m2. Another reason why they are so popular with investors at this point is the fact that they have actually depreciated. The owner usually asks some $140 000 for such an apartment. However, the buyer usually purchases it for $126 000 or less.
As far as Prague is concerned, the most popular areas are Prague-1, Prague-2 and Prague-6. It should be noted that there is a big differences between cities and villages in terms of housing prices. For example, a 1-room apartment in Prague may cost up to $110-135K while the same apartment located in the rural area can be bought for as little as $30K. 2-room apartments in the capital costs $ 130–175K while rural prices fluctuate within the $30–40K range. Meanwhile, 3-room apartments in the capital costs starting from $ 140–150K while the same sum can be spent to initiate turnkey construction of a big house (100-150 square meters) in 3-5 months.
Czech residential property. The average cost of 1 m2 of residential property in Prague is €4400. The most affordable property is located in Prague-21. The average cost of 1 m2 of residential property in this suburb is €1500.
All foreign investors who are thinking about purchasing residential property in Czech Republic, should now that one of the biggest benefits of investing in Czech residential property is the absence of taxes on new property. When selling residential property, the seller is obliged to pay a 4% tax.
Czech Housing Market Prospects
2012 was a bearish year for the Czech housing market. The same holds true for the beginning of this year. According to the information provided by the Czech office for national statistics, the prices in the secondary housing market have already dropped a couple of percents. However, the tendency seems to be gradually changing. Housing rent in most regions has been increasing over the last couple of months.
The comparative chart below shows current average housing prices throughout the country (in the local currency – the Czech Koruna).
According to www.nova-real.cz, the major reason why foreign investors keep purchasing Czech property is the fact that Czech Republic is an EU and Schengen Area member. Moreover, this European country can boast relatively high living standards and strong economy along with low inflation and affordable mortgage loans. Czech Republic is among the world’s TOP 10 countries in terms of investment attractiveness.
According to Bloomberg, the Czech Koruna is one of the strongest currencies in the EU. For those who want to invest in the local housing market, we have good news: analysts expect Czech housing prices to boost by at least 2% in 2013. 2014 is also expected to be a bullish year for the local housing market. This time, analysts expect it to boost by 4%.
What About European Crisis?
This is obviously an interesting question, especially if to consider the fact that most European markets are currently stagnating. If to consider the fact that Czech residential property has been selling like hotcakes over the last couple of years, we may conclude that the tendency will most likely continue in the near future as there is high demand for it. Obviously, investing in Czech residential property is one of the best options in today’s uncertain and unstable economic situation in Europe.
