By Anna Grybel-Kloc

The Czech property market is one of the most mature and developed markets in the CEE. This especially applies to Prague and Brno, which have been developing steadily, driven predominantly by domestic demand.

The markets grew strongly before EU entry, then high prices and oversupply caused stagnation (2004-2006) and only when local affordability kicked in again in 2007, did we see increasing prices (2nd phase of growth).

The property market in Czech 3rd tier cities, like Ostrava or Hradec Kralove have developed differently. Here, property prices started to grow only in 2007, when Prague and Brno entered the second phase of growth. Czech 3rd tier cities experienced rapid prices growth (30-50%) in a relatively very short-term (12-18 months).

Regardless of the path of development, property markets in Czech cities have started to slow down. Housing demand has dropped, which is clearly reflected by the growth in mortgage lending. Banks still report an increase in the sale of mortgages, but at a much lower level than a year ago.