Analysis: Average price of a new apartment in Prague increased by about ten percent year-on-year

The average selling price of new flats in Prague increased by 9.9 percent year-on-year. At the end of last year, a square metre cost CZK 151,643. This is according to an analysis published yesterday by the development companies Skanska Residential, Trigema and Central Group. According to the analysis, 3,100 new flats were sold in Prague last year, which is a drop of about 60 percent compared to the record year of 2021. The value of sales reached CZK 28 billion, down 51 percent year-on-year.

Residential market data shows that at the end of 2021, new flats were selling for CZK 137,946 per square metre, while at the end of last year they were CZK 13,697 more expensive. Quarter-on-quarter, the price rose by 2.5 percent. Offering prices for new housing in Prague rose by about seven percent year-on-year to CZK 154,881, confirming the stagnation of the market, with an increase of half a percent quarter-on-quarter.

"In the first half of the year, prices rose and in the second half the growth slowed down," said Marcel Soural, chairman of the board of Trigema investment group. He pointed out that statistics from Prague's districts are different, so the market is unstable and the situation is difficult to predict, he said.

Despite the slowdown in sales due to expensive mortgages, developers agreed that prices of new flats will not fall this year. According to them, the reason for this is increased costs, which reflect the rise in the price of building materials, labour and energy, higher land prices, slow permitting of flats and a shortage of labour in the construction industry. "Investors are already feeling all of this a lot during construction," Soural said.

In the fourth quarter of last year, 550 new apartments were sold in the capital, the same as in the third quarter. For the full year, 3,100 new apartments were sold, compared with 7,450 in 2021, up 140.3 percent. "2021 was the strongest year in recent history. If we compare last year to 2020, it is a 47 percent drop in sales, it was announced.

A survey by property developer Ekospol said last week that 2,400 new flats were sold in Prague last year, the fewest in 20 years.

Interest in new housing is still high and there is a shortage of new apartments on the market, according to Central Group founder and chief executive Dušan Kunovský. "Demand is deferred. We expect the market to revive in the spring months and to be crucial next year, when mortgage interest rates could already fall to three percent and by then monthly mortgage payments could be even lower than rents," Kunovský said.

According to the analysis, 5,100 new apartments were vacant in Prague at the end of the last quarter of last year, almost as many as at the end of 2020. Quarter-on-quarter, it was an increase of 8.5 percent, and compared to 2021, when the market was practically sold out, the supply is now 79 percent higher.

In the last quarter, 950 new homes came on the market, the second worst quarterly result since 2017. Petr Michálek, chairman of Skanska Residential, added that very few apartments continue to be permitted. While construction of nearly 10,000 units could get underway in 2021, it will be about half as many in the past year, Michálek said.

Source: Skanska Residential, Trigema, Central Group and CTK