Difference between revisions of "Development of real estate prices in Prague"

From Simulace.info
Jump to: navigation, search
(Conclusion)
(Results)
 
(40 intermediate revisions by the same user not shown)
Line 1: Line 1:
In progress
 
 
{{DISPLAYTITLE: Development of real estate prices in Prague (Vensim)}}
 
{{DISPLAYTITLE: Development of real estate prices in Prague (Vensim)}}
  
Line 13: Line 12:
 
</i> [online]. [cit. 2021-01-20]. Recheable from: https://www2.deloitte.com/content/dam/Deloitte/cz/Documents/real-estate/CZ-Real-index_3Q_2020.pdf</ref>]]
 
</i> [online]. [cit. 2021-01-20]. Recheable from: https://www2.deloitte.com/content/dam/Deloitte/cz/Documents/real-estate/CZ-Real-index_3Q_2020.pdf</ref>]]
 
Every year, the price of real estate in Prague increases rapidly.  
 
Every year, the price of real estate in Prague increases rapidly.  
As a result, young families can no longer afford to buy an apartment in the center of Prague, including a mortgage, and have to move to more educated villages and towns around Prague.
+
As a result, citizens can no longer afford to buy an apartment in the center of Prague and have to move to smaller villages and towns around Prague.
The purpose of this simulation is to show trends and development of prices for flats, houses, and other real estates in Prague for next ten years based on real historical data available on the Czech statistical office. The aspects which are taken into count are the influence of the investors, mortgage rates, population, lack of flats, and others.
 
  
The picture shows the development of the price of flats in Prague from 2014 to 2020. The picture shows the development of the price of apartments in Prague from the beginning of 2014 to the end of 2020. During this time, the price of real estate has increased by an incredible 84 %.
+
Therefore Prague becoming very inaccessible to ordinary citizens and, due to a large financial profit, has become popular field for wealthy investors and developers.
 +
 
 +
The purpose of this simulation is to show trends and development of prices for flats, houses, and other real estates in Prague for the next ten years based on real historical data available on the Czech statistical office. The aspects which are taken into count are the influence of the investors, mortgage rates, population, lack of flats.
 +
 
 +
The picture shows the development of the price of apartments in Prague from the beginning of 2014 to the end of 2020. During this time, the price of real estate has increased by an incredible 84%.
  
 
=Method=
 
=Method=
The Vensim tool is used to simulate the problem. In this tool, it is possible to simulate the development of real estate in Prague over the next ten years.
+
A detailed procedure for solving individual problems is described at the selected variables below. The Vensim tool was chosen for solving this simulation, because it is ideal platform for longer-term simulations
  
 
=Model=
 
=Model=
Line 29: Line 31:
 
===Population===
 
===Population===
 
Population of the Czech Republic. This is a data from September 30, 2020, initial value 10 707 839
 
Population of the Czech Republic. This is a data from September 30, 2020, initial value 10 707 839
[https://www.czso.cz/csu/czso/obyvatelstvo_lide]
+
<ref name="obyvatelstvo_lide"> Český statistický úřad. <i>Obyvatelstvo lidé</i> [online]. [cit. 2020-01-20]. Reacheable from: https://www.czso.cz/csu/czso/obyvatelstvo_lide</ref>
 
===Mortality===
 
===Mortality===
Initial value is based on data from Czech statistical office and it is set to '''0,0105'''.
+
Initial value is based on data from the Czech statistical office and it is set to '''0.0105'''.
[https://www.czso.cz/csu/czso/graf-zive-narozeni-a-zemreli-v-ceske-republice]
+
<ref name="narozenyazemreli"> Český statistický úřad. <i>Narození a zemřelí</i> [online]. [cit. 2020-01-20]. Reacheable from: https://www.czso.cz/csu/czso/graf-zive-narozeni-a-zemreli-v-ceske-republice</ref>
 +
 
 
===Natality===
 
===Natality===
Initial value is based on data from Czech statistical office and it is set to '''0,0105'''.[https://www.czso.cz/csu/czso/graf-zive-narozeni-a-zemreli-v-ceske-republice]
+
Initial value is based on data from Czech statistical office and it is set to '''0.0105'''.
 +
<ref name="narozenyazemreli"> Český statistický úřad. <i>Narození a zemřelí</i> [online]. [cit. 2020-01-20]. Reacheable from: https://www.czso.cz/csu/czso/graf-zive-narozeni-a-zemreli-v-ceske-republice</ref>
  
 
===Emigration===
 
===Emigration===
This rate was calculated as emigrants / population. That is 21 300/10 707 839 = '''0,002'''.
+
This rate was calculated as emigrants / population. That is 21 300/10 707 839 = '''0.002'''.
[https://www.czso.cz/csu/czso/cri/pohyb-obyvatelstva-rok-2019]
+
<ref name="pohybobyvatelstva"> Český statistický úřad. <i>Pohyb obyvatelstva</i> [online]. [cit. 2020-01-20]. Reacheable from: https://www.czso.cz/csu/czso/cri/pohyb-obyvatelstva-rok-2019</ref>
 +
 
 
===Imigration ===
 
===Imigration ===
This rate was calculated as immigrants / population. That is 65 600/10 707 839 = '''0,006'''.
+
This rate was calculated as immigrants / population. That is 65 600/10 707 839 = '''0.006'''.
[https://www.czso.cz/csu/czso/cri/pohyb-obyvatelstva-rok-2019]
+
<ref name="pohybobyvatelstva"> Český statistický úřad. <i>Pohyb obyvatelstva</i> [online]. [cit. 2020-01-20]. Reacheable from: https://www.czso.cz/csu/czso/cri/pohyb-obyvatelstva-rok-2019</ref>
  
 
===Population increase===
 
===Population increase===
Line 49: Line 54:
  
 
===Unemployment rate===
 
===Unemployment rate===
Rate of unemployment people in Czech republic. It is in about 277 015 people. It is set to '''0,038'''.
+
Rate of unemployment people in Czech Republic. It is in about 277 015 people. It is set to '''0.038'''.
[https://www.mpsv.cz/-/nezamestnanost-zustala-v-zari-na-3-8-pocet-uchazecu-mirne-klesl]
+
<ref name="nezamestnan"> Mpsv.cz <i>Nezaměstnaní</i> [online]. [cit. 2020-01-20]. Reacheable from: https://www.mpsv.cz/-/nezamestnanost-zustala-v-zari-na-3-8-pocet-uchazecu-mirne-klesl</ref>
 +
 
 
===Inflantion===
 
===Inflantion===
The initial value of inflation was set on '''0,03'''.
+
The initial value of inflation was set on '''0.03'''.
[https://www.czso.cz/csu/czso/cri/indexy-spotrebitelskych-cen-inflace-prosinec-2019]
+
<ref name="hypotéky"> Český statistický úřad <i>Inflace</i> [online]. [cit. 2020-01-20]. Reacheable from: https://www.czso.cz/csu/czso/cri/indexy-spotrebitelskych-cen-inflace-prosinec-2019
===GDP of Czech republic===
+
</ref>
Initial value is set as coeficient to '''0,95'''.
+
 
[https://www.kurzy.cz/makroekonomika/hdp/]
+
===GDP of Czech Republic===
 +
Initial value is set as coeficient to '''0.95'''.
 +
<ref name="nezamestnanost"> Kurzy.cz <i>GDP</i> [online]. [cit. 2020-01-20]. Reacheable from: https://www.kurzy.cz/makroekonomika/hdp/</ref>
  
 
===Mortages rates===
 
===Mortages rates===
Fio bank with 5 year of fixation - '''1,68 %'''. This value was set in simulation.
+
Fio bank with 5 year of fixation - '''1.68%'''. This value was set in simulation.
[https://www.hypoindex.cz/clanky/aktualni-sazby-hypotek-skupina-csob-zlevnuje-hypoteky/]
+
<ref name="hypoteky"> Hypoindex.cz <i>Hypotéky</i> [online]. [cit. 2020-01-20]. Reacheable from: https://www.hypoindex.cz/clanky/aktualni-sazby-hypotek-skupina-csob-zlevnuje-hypoteky/</ref>
  
 
===Quantitative easing===
 
===Quantitative easing===
Line 66: Line 74:
  
 
===Lack of flats===
 
===Lack of flats===
Lack of flats increases their prices. The significance coefficient is set to 0.9.
+
Lack of flats increases their prices. The significance coefficient is set to '''0.9.'''
  
 
===Abundance of flats===
 
===Abundance of flats===
Line 79: Line 87:
 
Factors that influence real estate growths
 
Factors that influence real estate growths
 
Equation: (1+(Increased demand*Inflation*Investors*Lack of flats))*Price of real estates
 
Equation: (1+(Increased demand*Inflation*Investors*Lack of flats))*Price of real estates
 +
<ref name="real estate"> Deloitte.com <i>Real estate</i> [online]. [cit. 2020-01-20]. Reacheable from: https://www2.deloitte.com/cz/cs/pages/real-estate/articles/cze-real-index.html</ref>
  
 
===Price of real estates decrease===
 
===Price of real estates decrease===
 
Factors that influence real estate decrease
 
Factors that influence real estate decrease
 
Equation:(1+(Abundance of flats*GDP*Unemployment))*Price of real estates
 
Equation:(1+(Abundance of flats*GDP*Unemployment))*Price of real estates
 +
<ref name="real estate"> Deloitte.com <i>Real estate</i> [online]. [cit. 2020-01-20]. Reacheable from: https://www2.deloitte.com/cz/cs/pages/real-estate/articles/cze-real-index.html</ref>
  
 
===Price of real estates===
 
===Price of real estates===
 
Equation: '''Price of real estates = Price estates growth - Price of real estates decrease'''
 
Equation: '''Price of real estates = Price estates growth - Price of real estates decrease'''
 
Initial value is set on '''94 300''' kč/m2.
 
Initial value is set on '''94 300''' kč/m2.
[https://www2.deloitte.com/cz/cs/pages/real-estate/articles/cze-real-index.html]
+
<ref name="real estate"> Deloitte.com <i>Real estate</i> [online]. [cit. 2020-01-20]. Reacheable from: https://www2.deloitte.com/cz/cs/pages/real-estate/articles/cze-real-index.html</ref>
  
 
=Results=
 
=Results=
To interpret the results, I chose two graphs and tables with specific data. The first graph shows the development of the population in the Czech Republic. This graph was not the subject of this work, but it is an interesting secondary output. The second graph and table describe the main purpose of this work, namely the development of real estate in the next ten years. That is, from 2020 to 2030. The graph and table show that according to this simulation and available data, the price per square meter in Prague will be 148,018 per year. Compared to the initial value from 2020, this is an increase of 57 %.
+
[[File:Resulttable.jpg|thumb|200px|right||Table of development of flat prices 2020-2030]]
 +
 
 +
To interpret the results, I put two graphs and tables with resulted data. The first graph shows the development of the population in the Czech Republic. By 2030 we can expect in Czech Republic almost 11.2 billion inhabitants. This result is mostly given by the huge amount of immigration from eastern Europe because the mortality and natality in the Czech Republic are on a similar level. This graph was not the subject of this work, but it is an interesting secondary output.  
 +
 
 +
 
 +
The second graph and table describe the main purpose of this work, the trend and development of real estate in the next ten years. That is, from 2020 to 2030. The graph and table provide the result data according to this simulation. As is obvious from the table, the final price per square meter in Prague will be 148,018 Kč in the year 2030. Compared to the initial value from 2020, this is an increase of almost 57%.
 +
 
 +
 
  
[[File:Resulttable.jpg]]
+
[[File:Resultpopulation.jpg||Pic. 3: Graph of the population in Czech Republic 2020-2030]]
[[File:Resultpopulation.jpg]]
 
 
[[File:Resultgraph.jpg]]
 
[[File:Resultgraph.jpg]]
  
 
=Conclusion=
 
=Conclusion=
The simulation confirmed the trend of recent years when apartment prices in Prague are increasing the most in comparison with all other European cities. The estimate of a price increase of 57% for the next 10 years is still very modest, also due to the economic crisis. In ten years, this simulation can be compared with reality, and as the author of this study, I believe that the percentage increase will be even higher. For investors and ordinary citizens, investing in the purchase of an apartment in Prague is not only a suitable means of protecting money against inflation but even a means of getting rich.
+
To conclude the achieved goals of this simulation, the trend of the recent years of real estate prices in Prague is increasing rapidly. In the fact,the most in comparison with all other European cities. As it follows from this simulation, the estimate of a price increase of 57% for the next 10 years. This prediction is still very modest, also due to the economic crisis. In ten years, this simulation can be compared with reality, and as the author of this study, I believe that the percentage increase will be even higher. For investors and ordinary citizens, investing in the purchase of an apartment in Prague is not only a suitable means of protecting money against inflation but even a means of getting rich.
  
 
=Reference=
 
=Reference=

Latest revision as of 23:52, 20 January 2021


Name: Development of real estate prices in Prague

Author: Petr Netolický, netp02, 19.1.2021

Used tool: Vensim PLE 8.2.0


Problem definition

Pic. 1: Development of flat prices 2014-2020 [1]

Every year, the price of real estate in Prague increases rapidly. As a result, citizens can no longer afford to buy an apartment in the center of Prague and have to move to smaller villages and towns around Prague.

Therefore Prague becoming very inaccessible to ordinary citizens and, due to a large financial profit, has become popular field for wealthy investors and developers.

The purpose of this simulation is to show trends and development of prices for flats, houses, and other real estates in Prague for the next ten years based on real historical data available on the Czech statistical office. The aspects which are taken into count are the influence of the investors, mortgage rates, population, lack of flats.

The picture shows the development of the price of apartments in Prague from the beginning of 2014 to the end of 2020. During this time, the price of real estate has increased by an incredible 84%.

Method

A detailed procedure for solving individual problems is described at the selected variables below. The Vensim tool was chosen for solving this simulation, because it is ideal platform for longer-term simulations

Model

The final picture of the model:

Realestatemodel.jpg

Variables

Population

Population of the Czech Republic. This is a data from September 30, 2020, initial value 10 707 839 [2]

Mortality

Initial value is based on data from the Czech statistical office and it is set to 0.0105. [3]

Natality

Initial value is based on data from Czech statistical office and it is set to 0.0105. [3]

Emigration

This rate was calculated as emigrants / population. That is 21 300/10 707 839 = 0.002. [4]

Imigration

This rate was calculated as immigrants / population. That is 65 600/10 707 839 = 0.006. [4]

Population increase

Population growth in the Czech Republic. Calculated over the equation: Natality * Population * Immigration

Population decrease

Population decrease in the Czech Republic. Calculated over the equation: Mortality * Population * Emigration

Unemployment rate

Rate of unemployment people in Czech Republic. It is in about 277 015 people. It is set to 0.038. [5]

Inflantion

The initial value of inflation was set on 0.03. [6]

GDP of Czech Republic

Initial value is set as coeficient to 0.95. [7]

Mortages rates

Fio bank with 5 year of fixation - 1.68%. This value was set in simulation. [8]

Quantitative easing

The government's intervention will increase inflation very noticeably, especially in times of pandemic. Therefore, its value is set to 0.31

Lack of flats

Lack of flats increases their prices. The significance coefficient is set to 0.9.

Abundance of flats

An abundance of flats decreases interest in flats increases their price. The coefficient factor is set to 0.2.

Investors

Investors' interest in flats increases their price. The coefficient factor is set to 0.55

Price of real estates growth

Factors that influence real estate growths Equation: (1+(Increased demand*Inflation*Investors*Lack of flats))*Price of real estates [9]

Price of real estates decrease

Factors that influence real estate decrease Equation:(1+(Abundance of flats*GDP*Unemployment))*Price of real estates [9]

Price of real estates

Equation: Price of real estates = Price estates growth - Price of real estates decrease Initial value is set on 94 300 kč/m2. [9]

Results

Table of development of flat prices 2020-2030

To interpret the results, I put two graphs and tables with resulted data. The first graph shows the development of the population in the Czech Republic. By 2030 we can expect in Czech Republic almost 11.2 billion inhabitants. This result is mostly given by the huge amount of immigration from eastern Europe because the mortality and natality in the Czech Republic are on a similar level. This graph was not the subject of this work, but it is an interesting secondary output.


The second graph and table describe the main purpose of this work, the trend and development of real estate in the next ten years. That is, from 2020 to 2030. The graph and table provide the result data according to this simulation. As is obvious from the table, the final price per square meter in Prague will be 148,018 Kč in the year 2030. Compared to the initial value from 2020, this is an increase of almost 57%.


Pic. 3: Graph of the population in Czech Republic 2020-2030 Resultgraph.jpg

Conclusion

To conclude the achieved goals of this simulation, the trend of the recent years of real estate prices in Prague is increasing rapidly. In the fact,the most in comparison with all other European cities. As it follows from this simulation, the estimate of a price increase of 57% for the next 10 years. This prediction is still very modest, also due to the economic crisis. In ten years, this simulation can be compared with reality, and as the author of this study, I believe that the percentage increase will be even higher. For investors and ordinary citizens, investing in the purchase of an apartment in Prague is not only a suitable means of protecting money against inflation but even a means of getting rich.

Reference

  1. Deloitte real index Development of the selling price of flats from 2014 to 2020 [online]. [cit. 2021-01-20]. Recheable from: https://www2.deloitte.com/content/dam/Deloitte/cz/Documents/real-estate/CZ-Real-index_3Q_2020.pdf
  2. Český statistický úřad. Obyvatelstvo lidé [online]. [cit. 2020-01-20]. Reacheable from: https://www.czso.cz/csu/czso/obyvatelstvo_lide
  3. 3.0 3.1 Český statistický úřad. Narození a zemřelí [online]. [cit. 2020-01-20]. Reacheable from: https://www.czso.cz/csu/czso/graf-zive-narozeni-a-zemreli-v-ceske-republice
  4. 4.0 4.1 Český statistický úřad. Pohyb obyvatelstva [online]. [cit. 2020-01-20]. Reacheable from: https://www.czso.cz/csu/czso/cri/pohyb-obyvatelstva-rok-2019
  5. Mpsv.cz Nezaměstnaní [online]. [cit. 2020-01-20]. Reacheable from: https://www.mpsv.cz/-/nezamestnanost-zustala-v-zari-na-3-8-pocet-uchazecu-mirne-klesl
  6. Český statistický úřad Inflace [online]. [cit. 2020-01-20]. Reacheable from: https://www.czso.cz/csu/czso/cri/indexy-spotrebitelskych-cen-inflace-prosinec-2019
  7. Kurzy.cz GDP [online]. [cit. 2020-01-20]. Reacheable from: https://www.kurzy.cz/makroekonomika/hdp/
  8. Hypoindex.cz Hypotéky [online]. [cit. 2020-01-20]. Reacheable from: https://www.hypoindex.cz/clanky/aktualni-sazby-hypotek-skupina-csob-zlevnuje-hypoteky/
  9. 9.0 9.1 9.2 Deloitte.com Real estate [online]. [cit. 2020-01-20]. Reacheable from: https://www2.deloitte.com/cz/cs/pages/real-estate/articles/cze-real-index.html

Code

Media:realestate.mdl