Despite market recovery, most developers will raise prices of flats in the Czech Republic

Despite a slight recovery in the housing market, most developers plan to increase the prices of flats this year by an average of 4.6 percent. According to them, the reason for this is mostly insufficient construction and therefore supply. It is taking a long time mainly because of lengthy permitting processes in construction and not keeping up with demand. Interest could rise by almost four per cent year-on-year in the first half of the year, with the gap widening to 6.4 per cent in the second half. The number of completed apartments in the Czech Republic is expected to increase by 2.4 per cent in the first half of this year. This is according to a study of development companies prepared by the analytical company CEEC Research and presented at today's Development Leaders Meeting. It was compiled from January to March based on interviews with 151 leading figures in the property development industry.

"Demand for new apartments in Prague grew by 30 percent last year. We expect another significant increase this year thanks to cheaper and more accessible mortgages and a reduction in the VAT rate for new apartments. The supply of new apartments, on the other hand, has been significantly insufficient in the long term due to dysfunctional permitting and persistently high prices of building supplies, expensive commercial loans, rapidly growing demand and the transformation of some projects into rental housing," said Dušan Kunovský, chairman of the board of Central Group, in an announcement.

As many as 61 percent of the surveyed executives at the companies intend to raise housing prices. Last year, according to the study, 63 percent of them said they would not raise prices. Of the developers surveyed, 37 per cent plan to keep prices at the same level as in previous years and two per cent plan to lower them this year.
In Prague, the outlook for new construction is slightly more optimistic. It is expected that more properties will be added to the market and supply will increase by 2.6 percent compared to last year. Interest in real estate will rise by 4.7 percent in the metropolis. In the second half of the year, demand for property is expected to strengthen further, growing by 5.2 per cent.

According to the Real Index of the consulting and technology company Deloitte, in the fourth quarter of last year the prices of flats in the Czech Republic started to grow again. After four quarters of falling prices, they rose 6.9 per cent quarter-on-quarter to an average of CZK 95,000 per square metre. Prices of flats rose the most in the Hradec Králové and Pilsen regions. However, they also decreased in five regions, most significantly in the Liberec region.

Traditionally, however, prices are highest in the capital. According to the analysis of the development companies Central Group, Skanska Residential and Trigema, the selling price of a new apartment in the last quarter of last year fell by 2.7 per cent quarter-on-quarter and by six per cent year-on-year to CZK 142,511 per square metre. The offer price per square metre in a new Prague apartment was roughly CZK 10,000 higher. According to their data, 4,000 new flats were sold last year, up 29 percent year-on-year.

Source: CEEC Research and CTK