The construction industry in the Czech Republic continued to suffer in 2010, lagging behind the overall economy, with a 7.8% fall in construction output, in contrast to estimated growth of 2.2% in GDP, according to PMR.

The Czech construction industry has been severely hit by the wider economic crisis experienced in 2009 and 2010. In 2009, gross domestic product contracted by more than -4%, and unemployment rose to more than 8% from 5.5% a year before. Fortunately, the economy began to recover in 2010, but the overall downturn has had an adverse effect on the construction industry.

Meanwhile, the number of repossessed properties sold at auction between January and November last year was 708, compared with 395 for the whole of 2009, according to Central Address, an information portal on public auctions.

One reason for the increase is the abandonment of buy-to-let properties from foreign owners according to Iva Novakova, head of residential services at King Sturge. She told the Prague Post: “In our opinion, one of the groups from whom these types of properties are coming to market is foreign investors who bought properties between 2006 and 2007 and then decided not to pay the mortgages for whatever reason. One reason might be that the (rental) yield is not what it seemed to be a few years ago.”

She also indicated that property prices are likely to keep coming down in the future, reportedly saying: “We see signs of pressure from the new projects, most of which have the advantage of lower development and construction costs and can afford to be marketed for lower prices than the vacant apartments in projects that are already completed.”