The growth of real estate prices is stopping. But we will pay almost 150,000 per square meter of a new apartment in Prague
photo: Patrik Pašek, PrahaIN.cz/One of the many development projects around the metropolis; illustrative photo
In the second quarter of this year, the prices of new apartments stabilized in Prague. The current average selling price of 145,783 crowns per square meter is comparable to the first quarter, but it is still almost a quarter of a quarter.
More newly added housing units have also appeared on the market over the past three months. In total, 950 new apartments were sold in the second quarter of this year, i.e. a third less than the long-term average.
This is mainly due to the unavailability of mortgages caused by record interest rates on new loans. The data is based on market analysis by Trigema, Skanska and Central Group.
Despite the continued increase in the price of key inputs and the same uncertainty regarding the future construction market in a period of high inflation, the prices of new Prague apartments remained at their original level.
The selling price has stabilized at 145.783 CZK/m2which is an increase of only CZK 34/m compared to the first quarter of this year2. The growth rate will thus be significantly reduced, but still increase by 23 percent. Growth also slowed down for the offered price, which nevertheless exceeded the threshold of CZK 150,000/m2 (152.051 CZK/m2only 17 percent more).
The developers are clear
“In a year-on-year comparison, the prices of new apartments in Prague have risen by roughly a fifth. But lately prices have been stabilizing and have only increased by about 5% since the beginning of the year. Overall, we expect growth of up to 10% this year. The reason is mainly a fundamental decrease in the number of people buying apartments with mortgages. Their interest rates have skyrocketed and are now roughly three times what they were a year ago. Therefore, at this time, most people postpone the purchase of a mortgage and wait for the interest to return again,” says Dušan Kunovský, founder and head of Central Group, in a press statement.
“Despite the slight increase, the supply of available apartments, especially in the metropolis, remains weak. In order to meet the needs of the market, it would have to be roughly double at the moment. In addition, the real scenario is that the coming crisis will also have a strong impact on some smaller developers, who will be forced to completely stop the construction of apartments, which will again lead to a subsequent decrease in supply,” explains Marcel Soural, chairman of the board of the Trigema investment group.
“The current situation on the mortgage market has practically overturned the cover structure. While in the past the number of clients who financed new mortgages prevailed, today this housing ratio is in favor of investment purchases. Interest in new housing in Prague persists, however, some clients, especially those under 30 years of age, cannot afford a mortgage under the current conditions, and must postpone the provision of new housing. Today, there are more buyers who purchase a new apartment and save their funds to protect against ever-increasing inflation,” adds Petr Michálek, CEO of Skanska Reality a.s. in a statement