Prague Property Price

Prague offers a wide selection of new, refurbished and off-plan property investments in Prague. Property in Prague represents an excellent investment opportunity for those who like to invest in real estate. Prices on Prague property for new of refurbished properties are increasing at 20% per year while the rental yields on new apartments are running at approximately 8.5%. The main thing that is driving this growth for the property is because the demand for these properties is steadily exceeding the supply of available places. In fact the Czech Statistical Office estimates that there is a need to build 50,000 dwellings each year until 2010.

There are more things than this happening as well. Let’s look at the other reasons why Prague property prices are booming so much:

• Government subsidies have helped to give the housing market a boost that helps Czech nationals to be able to borrow at just 2%. A shortage of homes is helping to boost property prices not mention raising the demand for rental property
• Economic and political stability have steadily gotten better. GDP growth is high at 4.1% that began in 2005. It is expected to consistently grow in 2006 and it really has to 4.3% in fact.
• There is a high inward investment.

The prices for Prague property are steadily proving that the investment is well worth the money it takes. Owning property that is for sale in Prague through a company may not sound great, but it does provide some administrative barriers and additional costs to owning the property. One of the biggest disadvantages to this is the taxation when it comes time to sell the property. Direct property owners such as the locals are not liable for tax on gains that are realized from the sale of a property if it is held for 5 years or more, but only 3 years if the owner lived there. Companies are liable for corporate tax which is currently set at 24% on profits from the sale pf the property no matter who owns it. Still this is a better deal than what you would get in the United Kingdom, for example, their taxes are 40% and more. This is proving that the price for Prague property is certainly affordable for the real investor.

These days the gross investment yields, which are the annual gross rental value or purchase price on residential housing in general, have a typical retail level of 8%. Yields in the city centre are even less than that and you can’t ignore the high vacancy rates that the luxury flats have. Just last year we were seeing yields of 10-12%. Falling yields are the natural result of sale prices growing faster than rental rates do. In theory this is supposed to show a maturing and stabilized economy. The lowered rate of return is simply a reflection of the lowered risk of investing into the Czech Republic. Although investors who are able to recognize that the risk/return ratio of the Czech property for sale in the Prague market are way more attractive than those of Western Europe. Taking advantage of the buy to let strategy of investing makes the prices of Prague property even more worth the effort. What could be better than that?