The growth in the prices of new apartments in Prague has stopped
“The market is slowing down, prices and purchases are being held back, and the appetite to invest in new housing is dramatically decreasing. We have reached the top and we will stay there for some time,” estimated Marcel Soural, chairman of the board of the Trigema investment group, during the presentation.
Compared to the first quarter, the selling price of apartments in the capital rose by 34 crowns per square meter. It is roughly 23 percent higher year-on-year. “Recently, prices have been stabilizing and have only increased by about five percent since the beginning of the year. Overall, we expect a growth of no more than one percent this year,” said Dušan Kunovský, founder and head of Central Group.
According to the developers, the sale of apartments is mostly caused by the unavailability of mortgages caused by a sharp increase in basic interest rates. Since the beginning of the year, there have been half as many mortgages negotiated. “The current mortgage market has practically overturned the cover structure, while in the past they thought about the number of people who financed a mortgage, today clients will buy this ratio of housing in favor of investment,” added Petr Michálek, CEO of Skanska Reality.
Growth also slowed down for the offered price, which nevertheless exceeded the threshold of 150,000 crowns per m2 (CZK 152,051/m2), which is 17 percent more protected. The bid price, which has been rising due to rising costs – mainly the prices of materials, energy and uncertainty in the market – is moving away from the selling price and returning to a long-term level of around a five to ten percent difference, the data shows.
“You don’t know what will happen in a month. This forces developers to be very careful with pricing and they will wait for how much they will be able to give,” said Soural. He expects that some developing projects may even stop.
In the second quarter, according to companies, 950 apartments were sold in Prague, thanks to which the offer increased to 4,150 apartments. This is almost a quarter year-on-year increase. Still, according to the analysis, this is 15 percent below the long-term average and more than 50 percent below the level that could sufficiently saturate demand. To be able to meet the needs of the market, it would have to be roughly double at the moment, Soural said.
Soural does not expect newly built apartments to become cheaper in the foreseeable future. And also because of the legislation. “Which orders houses and apartments to be built above standard. We build the best apartments in Europe and that costs something. If there is something to do with costs, then on the side of standards and decrees, to admit that it is possible to build houses with lower and cheaper parking spaces, ” he stated.
Different figures, but a similar trend is also presented by competitor Ekospol. On Monday, he said that the average price of a new apartment in Prague with a size of 55 square meters increased by 2,222 crowns per square meter. In the first half of this year, according to the company, 1,540 new apartments were sold in the capital, which is twice less than last year. According to her analysis, this year’s sales are the worst in the 15 years that the company has been monitoring them.