In Brno, the prices of apartments in new buildings continue to rise

Brno - In Brno, prices of apartments in new constructions continue to rise, as there is a shortage of apartments. The same situation has already transferred to the market for older apartments, and rental prices are even increasing. The shortage of all types of apartments on one side and the abundance of money among people lead to the fact that finding suitable housing is not only difficult in Brno, but the problem is starting to expand to the whole of South Moravia. This follows from information from developers and real estate agencies.

For example, a joint analysis published today by Trikaya and the Sreality.cz portal indicates that since last spring, the prices of apartments intended for sale in the South Moravian Region have risen by 15 percent - the most directly in Brno, where prices have increased by nearly 19 percent. Rental prices in South Moravia have risen by 29 percent during the same period.

"The new construction market is closely linked to the entire real estate market. The fifteen percent price increase announced by builders in connection with insufficient construction of new apartments is now, according to all expectations, spilling over into the prices of older apartments," stated the director of Trikaya, Alexej Veselý. The usual price of an older apartment in Brno is around three million crowns; when purchasing an apartment in a new building, a buyer must expect an additional half a million.

Enormous interest in Brno apartments is confirmed by the vice-chairman of the board of the real estate company Gaute, Dušan Přikryl. "Demand, along with very attractive conditions for financing real estate, is driving up property prices in Brno and its surroundings. However, the interest is not only in new constructions but also in existing buildings. Our department for renting apartments and family houses is also reporting sold out. And this is not just in strong months when students are aggressively pursuing offers," said Přikryl.

In South Moravia, prices vary according to individual districts, but the usual price for a 1+kk unit is 1.5 million crowns, a 2+kk can be acquired for 2.25 million, a 3+kk for 2.7 million, and purchasing a four-room older apartment requires an investment of nearly five million crowns.

"When selling an apartment in the South Moravian Region, sellers expect a price that is 300,000 crowns higher than in the spring of 2015. This represents a 15 percent price increase, making it the second fastest price rise in the Czech Republic after Prague. Moreover, apartments in South Moravia are selling 58 days faster. South Moravia is a region where there is a clear hunger for apartments compared to last year, and this drives prices up," stated the manager of the Sreality.cz portal, Michal Zadák.

For owners who have already purchased a new apartment, good news is that along with the rising property prices, rents are also increasing. Monthly rent has increased by 29 percent since last spring, meaning the usual price is 9,000 crowns. "Eight out of ten rented apartments in South Moravia are found in Brno. Already last spring, prices in the Brno-city district were around 9,500 crowns per month. This winter, it was just shy of ten thousand," added Zadák.

According to analyst Jiří Šimara, the growth in demand for real estate, besides well-known factors such as cheap money, rising employment, and weak construction, is also fueled by one-time factors like the impending adoption of a law on consumer credit or the transfer of tax liability for property transfer tax from the seller to the buyer. "Both events will complicate the purchase of real estate, so people are clearly trying to buy an apartment or house in advance," stated Šimara.

According to Vladimír Veselský, the most significant price increases are for investment apartments, specifically smaller apartments. However, he also notes that it is still a question of what the market will do when the payment of the real estate acquisition tax changes, with the buyer becoming the taxpayer starting in November. "Most sellers will want to transfer the tax to the buyer. In such a case, prices could rise by four percent. However, I do not expect buyers to accept this artificial increase; nevertheless, it is expected that, at least partially, due to this change, the property prices, including the acquisition tax, will increase," commented Veselský.