The Czech National Bank (CNB) has reported that prices continue to fall in the country’s residential real estate market, with asking prices slipping another -5.2% in 2011.

Like many EU countries, the Czech Republic is now in recession, and the average price of an apartment has fallen to €70,000, although prices in central Prague are reported to be faring much better, according to realitymorava.ck, which lists average apartment prices in Prague 2 to be €195,000 and Prague 1 to be €177,000.

Further economic contractions are expected this year in the country and the government has acted to shore up the budget deficit by raising the VAT for the second time since January 2010 to 14%. Another hike is on the horizon, though, as Czechs prepare for the unified 17.5% VAT that will take effect in 2013.

Property prices are reportedly expected to fall another -4% this year and transactions last year were 20% below the peak levels of 2008.

The CNB recently decided to keep its base rate unchanged at 0.75%. It has been at that level since May 2010, despite inflation reported at 3.8% in Q1 2012.