The Czech housing market made a strong comeback in 2024, with property prices soaring back to their peak levels.
While many Czechs had hoped for a drop in mortgage rates, particularly after they hovered around 6% in 2023, the reality has been far from the anticipated relief. In fact, despite a slight decrease of 0.8 percentage points in mortgage rates this year, to 5.22%, property prices have reached new heights.
Last year, many were looking back nostalgically at 2021, when mortgages were available for less than 2%. However, this year’s decrease in interest rates, while somewhat easing financial pressure, has been less dramatic than expected. “The entire 2024 year will be marked by a gradual decrease in mortgage rates. However, this decrease has been less significant than initially expected,” said Jiří Sikora, mortgage analyst at Swiss Life Select.
Sikora highlights a few key reasons for this. One factor is a limitation in the cap on early mortgage repayment fees under the Consumer Credit Act. Another reason could be that banks, after years of operating with low margins, are now in a stronger financial position and are less eager to reduce rates significantly.
Despite a modest drop in interest rates leading to a 2,000 CZK reduction in monthly payments for a typical 3.5 million CZK loan, expectations for substantial relief have dissipated. This trend is reflected in the offerings on the real estate platform Sreality.cz, where an uptick in demand has driven prices higher.
Property prices in the third quarter of 2024 have already surpassed those from the same period in 2022, when the market was still grappling with record-high prices due to soaring demand. Smaller apartments have seen the largest price increases in regional areas, while the rise in prices for larger apartments has been most pronounced in Prague, with asking prices up by 8% compared to the previous year.
“Our forecast was confirmed: apartments in Prague will return to the original level faster after the price drop and will resume growth,” said Hana Kontriš. A similar price surge has been noted in the Moravian-Silesian Region, where prices are up by 7% compared to 2022, and in the Karlovy Vary Region, where they’ve risen by 5%.
With demand steadily returning and interest rates remaining relatively high, the Czech housing market is witnessing some of the most expensive apartments in history.
