How is the coronavirus affecting the Prague real estate market?
As famous Prague YouTuber Janek Rubeš from Honest Guide recently blogged, the coronavirus outbreak has not only left the streets of the Czech capital empty – it has had the same effect on many Airbnb apartments. . Prices have fallen to their lowest level in 15 years with the current travel ban.
This was confirmed on Czech radio by the president of the Association of Real Estate Companies Jaroslav Novotný.
“Airbnb is dead right now because no one is traveling. There is no short term rental going on, only in exceptional cases. This has also manifested in the market where you can see owners of Airbnb apartments put them into rent eventually. “
The decline in rents is expected to continue for months, he said, before related elements of the market, especially businesses associated with tourism, resume their full swing.
However, the coronavirus could also impact the prices of houses and apartments themselves, Mr Novotný said.
“It could happen. Of course, we don’t know how long the coronavirus crisis will last, but if it continues for months, then I’m sure we’ll see price movement within a quarter of a year or five. month.”
Real estate experts are unwilling to speculate on the exact level of impact the COVID-19 outbreak is likely to have. The general consensus seems to be that the longer the crisis lasts, the greater the final effect on prices.
On the flip side, some say there will only be a slowing effect, with continued growth almost certain at the end. Homeowners focused on Airbnb will likely revert to this form of short-term rental as soon as the crisis subsides.
To stimulate the housing market, the Minister of Finance Alena Schillerová proposes the cancellation of the tax on real estate transfers. Currently, buyers are required to pay a tax of 4% of the total purchase cost to the state within three months of purchasing the property.
Ms Schillerová outlined the details of her proposal last week.
“This tax has always had an impact of around CZK 13-14 billion per year. What better time to make this change than now? We also have to ask ourselves when are we going to put this change in place, because if we announce a date , the market just shut down with everyone waiting for the tax to end, so we would be putting it in retroactively as well.
“I’ll be honest. The idea is that those who have already paid the tax would get a reduction in mortgage payments. Those who no longer have to pay the tax on home transfers will not get these discounts.”
The government is expected to discuss the measures on Wednesday, and the finance minister has said that, if approved, she would like the legislation to come into force as soon as possible. What she stressed is that canceling the tax on real estate transfers would be a long-term arrangement, going beyond the coronavirus crisis.