Why aren’t resi prices falling?

dum_rezidence.jpgSo, residential developers in CEE are doing their utmost to keep prices exactly where they were a year ago. But we also know that residential sales are down all across the region. Why isn’t anyone connecting those two dots? Isn’t this a simple case of cause and effect?

There are other extenuating circumstances, like a severely reduced appetite to take out mortgages for fear of the future. But that doesn’t mean the market hasn’t shifted. It doesn’t necessarily mean that once people are more confident of the future, they’ll buy flats at the old prices. It’s probably too close to summer now to expect any major new initiative, price-wise. But what will happen come fall, when developers or owners have had enough time to think about the cost of the capital tied up in their  projects? To say nothing of the opportunities that will inevitably arise.

Granted, foreclosures aren’t nearly as widespread in CEE as they are in the United States. But does it make sense to ignore what’s going on there? Take a look at this study (meaning click on the link) by Deutsche Bank, in which it predicts that New York City resi prices still have 47 percent to fall. For a Czech example, based as usual on little to no data, just read the headlines from an article on today’s aktualne.cz : “Homes selling for less than advertised”

So why aren’t prices falling? We’d welcome a discussion about this in the comments section (hint, you can leave fake email addresses to remain anonymous). Or even better, feel free to add your comments or theories on Linked In in the CEDEM CEE group. Everyone’s free to join!

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3 responses to “Why aren’t resi prices falling?

  1. Banks aren’t putting pressure on the developers yet, but it’s only a matter of time!

  2. Joseph Bloggs

    Warsaw prices are back at least 15% from 1 year ago and probably are close to the bottom.

  3. In Warsaw, prices aren’t falling that much because the government subsidies to mortgages are said to keep them from falling further.
    @Joseph
    How can you know that they’re close to bottom? Can you support it somehow?

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