New flats in Prague continue to become more expensive, in winter the average price was CZK 145,749 per m2
Updates: 04/27/2022 13:04
Released: 27.04.2022, 13:04
Prague – Sales prices of new flats in Prague continue to rise. In the first quarter of this year, located in the metropolis climbed by almost 30 percent to an average of 145,749 crowns per square meter. They have risen in price by 5.7 percent since the end of last year. This resulted from an analysis by development companies Trigema, Skanska Reality and Central Group, according to which the reason for the increase in apartment prices is lower supply caused not only by inflation and higher mortgages, but also by rising construction work, materials and energy. The uncertainty caused by the war in Ukraine is also reflected in the prices.
At the end of the first quarter, those interested in new housing could choose from about 3,200 new flats, which is about a thousand flats less than a year ago. “The offer is still woefully small and this situation is unlikely to change. That is why the apartments are so expensive,” Marcel Soural, chairman of the board of Trigema investment group, told reporters today. “In the first quarter of the year, the sold-out offer was only slightly supplemented, but in order to satisfy market needs, it would have to be at least triple,” said Petr Michálek, chairman of the board of Skanska Reality.
The analysis showed that there are practically no apartments with a price below CZK 100,000 per square meter, on the contrary, apartments with more than CZK 400,000 per square meter have been added. “Four years ago, we would not have foreseen such a thing. If it continues to rise in price, then the middle class is likely to decide whether to buy or rent, and rather rent,” Soural said.
Furthermore, the greatest interest is in smaller flats (1 + kk and 2 + kk) and most new flats are being built in Prague 4, 5, 9 and 10. The cheapest prices are in Prague 8, where a square meter costs about 139,000 crowns.
Apartment prices, in particular, their lack. Developers with a bid price that has approached the sale are delayed because they cannot estimate where it will climb. “That’s why he’s adding a risk premium,” Soural said, citing a dynamic time. “We lived in covid for two years, which tore up supply and demand chains and especially price stability. We have achieved a lot of money that is not hidden work. Another factor is the war in Ukraine, which has deepened uncertainty and it spilled over into the construction market,” he said. Soural invaded Russia on Ukraine.
According to him, there is a significant share of housing prices, which are in short supply and which are growing. “All commodities are going pointlessly. Manufacturers and wholesalers are not only taking energy and labor into account, but they are taking advantage of the situation and adding big margins and distorting the market,” said Soural.
According to him, nothing can be predicted in the long run, however, apartment prices could gradually stabilize. “But there is a need to stabilize material prices. If the market does not slow it down, there will be less willingness to give new products. The best pressure is the market,” Soural said.
The prices of older, so-called second-hand flats also rose. In Prague, their average selling price is 129,737 crowns per square meter. Thus, the interest in names grows. Real estate network brokers RE / MAX recorded a higher number of apartment rentals in the first quarter of the year, by up to 20 percent compared to the same previous quarter. “The demand for rent is extreme, but it is not just the war in Ukraine, it may also be a consequence of the fact that it is difficult to buy one’s own housing and people do not even have to obtain a mortgage,” RE / MAX director Jan Hruby said in a press release.
Names also become more expensive. According to Trigema, the average gross rent per square meter rose to 348 crowns. RE / MAX states that the tenant will pay an average of 290 crowns per square meter. “A large part of the company will live in rent. It will soon be more common to commute to work. In the Central Bohemian Region, thanks to this trend, the real estate market is already moving more than in the past,” Hrubý added.