Czech Republic

Trading in the Czech Republic's property market only began after the fall of Communism in 1989, but since this time the embryonic industry has flourished along Western lines.

The Czech Republic was one of the eight former communist countries which joined the European Union in 2004, and prices have risen accordingly since then.

Communist influence

However, the influence of the Communist past is still evident in the country. The majority of property built under the regime took the form of high-rise multiple unit buildings, made from pre-fabricated materials.

While these were ostensibly designed to last generations they were in fact cheaply constructed, leading to ugly landscapes and rapidly dilapidating property.

Over two million such properties were built and approximately 50 per cent of the present housing stock is composed of these 'panelaky' or panel apartment buildings. Approximately 43 per cent of the Czech population live in such buildings, according to Czech-Real-Estate.com.

While these developments can be a strong investment, especially in penthouse apartments, buyers are advised to be wary and carry out rigorous inspections before committing to a purchase.

Much more in demand is property built before World War II, along with construction completed in the last decade.

In these sectors prices are higher, but increased demand can also lead to higher rent yields and capital appreciation.

Prague

The Czech Republic's property market can be divided into two sections, Prague and everywhere else.

This is based on two factors.

Firstly, the city is home to a growing number of international business headquarters, bringing a skilled workforce to the city.

Consequently wages in the capital are higher than most areas outside the city, pushing property prices upwards.

According to SunandSkiHomes.co.uk the average wage in the capital city is 50 per cent higher than the rest of the Czech Republic, and this wealth is reflected in the property market.

Secondly, Prague is almost exclusively home to the Czech Republic's tourism industry.

Almost three million people visited the country in 2006, with 2.8 million visiting Prague alone.

These two factors have made the city the key location for overseas investors looking at the Czech Republic.

The districts of the city are referred to by number; with the most popular investment destinations including the fashionable, cosmopolitan Vinohrady district (Prague 2 and 3), the slightly cheaper Dejvice (Prague 6) and Vrsovice (Prague 10) areas.

PropertySecrets.net predicts a 15 per cent increase on average property prices in the Czech Republic over the next decade, with this growth largely coming from the capital city.

A one-bedroom apartment now costs around £70,000. In comparison, a similar property in the Czech Republic's second city, Brno, could cost closer to £40,000.

Countryside renovation

Outside Prague and other cities, countryside property in the Czech Republic can offer some interesting opportunities.

The gradual urbanisation of the country has left a wealth of property available in small village locations, which can be purchased relatively cheaply.

Renovation of such property can be a financially rewarding activity, and is easier than building property from scratch, as existing homes will be connected to water, gas and electricity supplies, as well as having road access.

Prices outside of the capital are just 38 per cent of the EU-15 median, according to analysts Amberlamb.com, providing good potential long-term returns for investors.

Investment opportunities

The country is economically and politically stable, both of which should prove encouraging to investors. The currency, the koruna, is also relatively secure, and is presently trading at around 40 koruna to the pound.

Furthermore, the Czech mortgage market has been maturing in recent years, paving the way for domestic buyers to purchase their own property and allowing investors to secure the necessary finance.

When purchasing a property a three per cent tax is levied on most sales of property and 2.5 to 4.5 per cent of the sale price is paid in estate agent fees by the seller.