Cheaper homes? Do not count on it yet. Ondřej Průcha explains what really drives property prices

Lower mortgage rates may bring more buyers back to the market. But without a sufficient supply of new homes, they are unlikely to make housing more affordable. In Týdeník Echo’s special report on real estate, Ondřej Průcha, CEO of Svoboda & Průcha and a lecturer at NEWTON University, explains why the pace of construction will be the decisive factor.

Demand for housing remains strong, while the supply of new homes is growing far too slowly. Property prices reflect the rising cost of building materials, labour shortages, financing expenses and lengthy planning and approval procedures. In these conditions, lower mortgage rates alone will not improve affordability.

According to Ondřej Průcha, interest rates will influence the timing and intensity of the property cycle, but not its long term direction. That will depend primarily on how quickly new homes can be built. Faster approval procedures could reduce development costs while increasing supply. This combination could create genuine downward pressure on price growth.

The article also explores regional differences across the Czech housing market, the growing role of rental housing and the importance of the wider environment created around new residential developments.

Read the full article in Týdeník Echo’s special report on real estate.