Prices of Czech residential housing are growing at the fastest pace in Europe, but that does not necessarily mean that the real estate is "overpriced". In relation to rental prices, it is not. In terms of accessibility, i.e. in relation to wages, it is, though, says Jan Bureš, Economist at CSOB and Chief Economist at Patria Finance during a "Morning Coffee" session.
Behind the price development of residential housing in the Czech Republic there is natural demand by households, plus lagging supply, especially in regions such as Prague, Central Bohemia and Southern Moravia.
We do not percieve the current price development as particularly dangerous, Jan Bureš says, because 1. there are is not too much speculative demand, and 2. we believe that indebtedness of Czech households, although rising significantly in the past 2 years, is stil not excessive; it is still below EU and OECD average. We can see it already now, that the indebtedness of Czech households will not accelerate as fast as in the previous years.
As for price development in residential housing, we expect a slowdown of growth to around 5% in 2019.
The infographic below shows year-on-year growth of prices of residential housing in the EU (October 2017 data)
The image below shows the deficit (insufficient supply) of residential housing/units in Czech regions, the largest gap being in Prague (-5,709), Central Boehmian (-2,726) and South Moravian regions (-1,906).
The simulation below says that CSOB expects prices of residential housing in the Czech Republic to grow by 6% in 2018 and 5% in 2019.
View full video presentation in Czech.
Ceny nemovitostí v Česku rostou nejrychleji v Evropě. Tempo zdražování je ale již za svým vrcholem, vyplývá z analýzy @BuresHonza #RealitniBoom #CenyNemovitosti https://t.co/9o2NZmhUKK pic.twitter.com/O8KAnu8UQp— ČSOB (@CSOB_CZ) May 3, 2018
Source, infographics: CSOB/KBC