Prague apartments: Year-on-year price increases by a fifth
According to Ekospol, the year-on-year increase in price by almost a quarter means that a new average apartment will cost 7.85 million crowns. That’s almost a million and a half more than twelve months ago. Quarterly, apartments rose in price by 5.6 percent – a sample apartment is 414,000 crowns more expensive at the end of June than at the end, according to the company’s data.
“They are the main factor driving the prices of new apartments up constantly increasing the cost of construction work and material. Land, of which there is an extreme shortage in Prague due to an outdated and not updated spatial plan, is also significantly more expensive. Ten percent off the price in addition, they must also account for the delays in building permits, which did not speed up even after the adoption of the new building law. The impact of this legislation was not enough to manifest itself,” said Ekospol CEO Evžen Korec.
According to Ekospol, last year’s high interest in apartments has been replaced by a decline this year. A year ago, in the first half of the year, 4,330 apartments were sold in the metropolis, this year 1,540. The reason is mainly rising mortgages, the company claims. “They are unavailable. Previously, around 50 percent of buyers financed the new apartment through mortgages, this year their share has dropped to 20 percent. The rest of the clients are those who buy an apartment with their own money, mostly as protection against high inflation,” said Korec.
Despite the drop in sales, Korec does not expect a significant decrease in the price of apartments. According to him, the persistent increase in the price of construction works and materials in the order of tens of percent does not leave any room for significant discounts. No investor would rather want to temporarily suspend losses, said the head of Ekospol.