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This study examines the complex dynamics of the Czech real estate market, focusing on the interaction between mortgage rates and residential property prices, the influence of dwelling size on market price trends, and the impact of regional economic disparities on property values. We find that lower mortgage rates paradoxically raise house prices through increased demand, calling into question the effectiveness of monetary policy in improving housing affordability. This counter-intuitive effect highlights the complex interplay between fiscal policy and market responses. In addition, the analysis reveals a significant shift towards smaller dwellings, increasingly favoured by single-person households, reflecting changing demographic trends. This shift has clear implications for price dynamics and market accessibility in both the sales and rental sectors, suggesting a nuanced response to consumer preferences across different market segments. In addition, the research highlights a strong correlation between regional economic vitality and property prices, underlining the profound influence of the broader economic landscape in shaping property values in different areas. By integrating these critical aspects, the study provides a comprehensive and nuanced understanding of the factors influencing the Czech property market, offering valuable insights for policy makers, property developers and investors seeking to navigate or influence this market effectively.
Eduard Hromada (Thu,) studied this question.