Sales of new flats in Prague fell by half, while the price per square meter rose by a fifth
27. 4. 2022, Praha – Insufficient supply and fundamentally expensive mortgages have significantly affected the Prague residential market. Sales of new flats fell by less than half this year compared to the first quarter of last year. From January to the end of March, developers sold only 780 new flats, which is the least since the first quarter of 2012. There are still very few flats available in the developers’ price lists. On the contrary, price growth is still continuing, the square meter of a new apartment is sold on the Prague market for as little as 135,210 crowns, which is protected by 19.5 percent more. This follows from a detailed analysis by Ekospol, which monitors the market for new flats in Prague and subsequently publishes sales data for more than 15 years, which is the longest of all entities on the market.
“The prices of new flats are rising for several reasons. Construction work and materials have become significantly more expensive; in some craft professions, we are seeing a year-on-year increase of tens of percent. Flats are also becoming more expensive due to the lack of building land due to the exhausted zoning plan. The buyer must also add ten percent to the price due to delays in permitting constructions, which did not accelerate even after the adoption of the new Building Act. The impact of this legislation has not been enough, ” Evžen Korec, Director and Chairman of the Board of Directors of the Ekospol General Development Company, said.
“The situation on the Prague real estate market is increasingly being offered by rising mortgages, which are twice as expensive this year as a year ago. At the same time, new flats have been financing up to half of buyers with a mortgage loan for a long time, but they are now declining. Due to this, the buyer’s profile changes completely. People buying a new apartment for their own housing due to the new tightening of the conditions for obtaining a mortgage in April, on the contrary, the share of investors will increase, ” remarked Korec from Ekospol.
Very few new ones were sold in the last quarter of last year, and due to the stricter conditions for obtaining a mortgage since April, it is not possible to expect an increase in buyers who finance the new apartment through mortgages. “Customer buying a new apartment for their own housing will replace investors looking for a secure investment and hedging against rising inflation. I expect that you will reach up to 15 percent this year, which practically means that for every hundred thousand crowns a person will lose 15 thousand. Real estate is one of the few safe ones that not only protects against inflation, but still carries a certain yield, as shown by last year’s investment of almost 20% appreciation of apartments. Therefore, more and more people with free funds will choose to buy an apartment. Whether for another lease or just to protect money from inflation,Korec assumes.
Interest in new flats was still very high in Prague last year. For the whole of 2021, the developers sold a total of 6,450 flats. That is 1,540 flats sold more than in 2020. This is the highest number since 2016. Last year’s second quarter was particularly strong, when a record 2,350 flats were found. This is the most in 15 years when Ekospol publishes these statistics.
The apartments are available for at least 15 years, a fifth are sold exclusively before launch
Those interested in a new apartment are in a worse position when choosing it. Despite lower sales, developers’ price lists remain very favorable at the lowest level in the last 15 years. At the end of March, clients could choose from only 2,550 new apartments.
“Developers in Prague alone are preparing hundreds of projects with tens of thousands of flats. However, their permission is disproportionately long. The impact of the new building law, which was to speed up the permitting process, did not materialize. The replenishment of thin price lists is thus very slow and they are not able to respond promptly to market demand“Notes Korec from Ekospol.
It is interesting that more and more new flats will not even reach the market, many will be sold before they are included in the price lists. Developers offer new projects exclusively in advance to former clients or registered applicants, who can usually choose from the new offer a few days earlier than others. This is the fifth new apartment sold this year.
EKOSPOL as is a long-term leader in housing construction in the Czech Republic. Over the course of 30 years, the market has successfully completed 57 major development projects for more than 10,000 satisfied customers. He builds and sells apartments with an optimal price-quality ratio. According to the international magazine Construction & Investment Journal, the company is ranked among the 50 largest developers in Central and Eastern Europe. Sponsored by ZOO Tábor. Endangered species will be supported by everyone who buys an apartment here. In addition, I get a year-round family ticket.
EKOSPOL as is a long-term leader in housing construction in the Czech Republic. Over the course of 30 years on the market, EKOSPOL has successfully completed 57 large development projects for more than 10,000 satisfied customers. EKOSPOL builds and sells apartments with an optimal price-quality ratio. According to the international magazine Construction & Investment Journal, EKOSPOL is ranked among the 50 largest developers in Central and Eastern Europe.
EKOSPOL sponsors the ZOO Tábor. Endangered animal species will be supported by everyone who buys an apartment from EKOSPOL. In addition, I will receive a year-round family ticket to the Tábor Zoo.
More information at: www.ekospol.cz