There are waiting lists for apartments in Prague, sales are breaking records. Prices continue to rise
At the end of June, sales prices of new flats in Prague rose by 9.4 percent year on year to 118,480 crowns per square meter. Compared to the first quarter, prices rose by 5.6 percent. Fill it out from the current analysis of development companies Trigema, Skanska Reality and Central Group.
According to them, the growth of prices accelerated due to the excess of demand over supply, it also reflects the rising prices of construction materials.
“Sales have been at record levels for nine months in a row. The demand of women still very affordable mortgages and also the fear of devaluation of savings due to inflation. Queues are even being created for flats, and new projects will be sold out for the most part almost immediately after their launch on the market, “said Dušan Kunovský, the founder and head of Central Group.
The analysis shows that during the second quarter of this year, a record 2,650 new flats were sold in the metropolis, while the number of units offered fell to 3,350.
According to companies, 4,750 new flats were sold in Prague in the whole half-year, almost double year-on-year. The greatest interest of people in buying speeches on the layout of 2 + kk, the second store strongest position occupied three-room apartments.
An above-average number of new flats went on sale.
“An above-average number of new flats went on sale, but even so, the huge interest of buyers was able to reduce the offer to a historic low. In order not to remotely distort the new housing market, a balance must be struck between supply and demand. That is why we recommend calling for faster approval of new construction, “said Petr Michálek, CEO of Skanska Reality.
According to statistics, the average price of one-room flats rose sharply. Their unit price reached the effect of 128,278 crowns per square meter. The price of large, five-room flats, for which the average price remained at 123,823 per square meter (m2), pays off immediately for them. For dispositions 2 + kk it was 116 848 crowns per m2, for 3 + kk then 113 079 crowns per m2, the prices of four-room flats then climbed to 116 315 crowns per m2, the analysis shows.
“In the period of expected inflation growth, the savings of Czech households and investors in real estate purchases are changing. We have been following this trend for more than three years. In the last year, influenced by the covid atmosphere, however, it has increased even more. Insufficient supply of new flats is not a satisfactory demand appetite, and therefore the growth of prices of new flats in Prague accelerated again to ten percent. It is highly probable that similar growth will continue for several more months, “added Marcel Soural, Chairman of the Board of Trigema.
The investment in Prague will not pay off, the north of Bohemia is more advantageous
Due to rising apartment prices, Prague has not been a suitable place for real estate investments for a long time. According to a recent ranking by Forbes magazine, northern Bohemia is now the most suitable area for investment. Especially Chomutov. The average forty-meter apartment in a statutory town in the Ústí nad Labem Region is sold for 775 thousand crowns, but an annual yield of over ten percent can be expected.
In the north of Bohemia, flats are still sold well below cost, and in the following years they promise a jump in value. Years ago, it was different. In the forefront of the investor’s interest was Prague, České Budějovice or Hradec Králové.
Today, the top five ranks of the ranking belong to cities in northern Bohemia and Silesia. After Chomutov, it pays to buy an apartment in Ústí nad Labem, Ostrava, Karviná and Frýdek-Místek.
In Chomutov, the return on investment in an apartment is nine years, in Karviná eleven years and in Ústí nad Labem twelve years.
According to some real estate experts, apartment prices are still rising due to insufficient supply, which is due to slow construction. The Czechia ranked 156th out of 190 countries in the World Bank’s ranking in terms of the speed with which building permits are processed. Nevertheless, the problem does not only concern Prague.
The new building law, which was approved by the Chamber of Deputies in mid-July when it overruled the Senate veto, promises to speed up construction.
Due to rising prices and still low rates, Czechs are borrowing at a record rate. According to Fincentrum Hypoindex, the average mortgage rate provided in June was 2.13% per year. However, banks’ bid rates are already higher.
It can be assumed that growth will continue, also due to the increase in interest rates by the CNB.
Mortgage prices have risen in recent months. During June, almost all banks raised bid rates. “It can be assumed that growth will continue, thanks to the increase in interest rates by the CNB. This is confirmed by the current offer rates of banks, which in some cases are up to 0.8 pp higher than the average mortgage interest rate according to the Fincentrum Hypoindex, “said Jiří Sýkora.