A square meter of a new apartment in Prague sells for 146,000 crowns
Residential construction in Prague. Illustration photo: archive
The growth in sales prices of new apartments in Prague stopped quarter-on-quarter in the second quarter of this year. The average price of the apartment sold was 145,783 crowns per square meter (m2). From the analysis of the development companies Trigema, Skanska Reality Central Group, it follows that this is mainly due to the unavailability of rising mortgages, 950 new apartments were sold, which is a year-on-year drop of almost 65 percent.
“The market is slowing down, prices and purchases are slowing down, and the investor’s appetite for new housing is decreasing dramatically. We have reached the top and we will stay there for some time,” estimated Marcel Soural, chairman of the board of the investment group Trigema, during the presentation of the analysis.
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 maximum growth of up to ten 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 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,” added Petr Michálek, CEO of Skanska.
The growth also slowed down in the offer price, which nevertheless exceeded the threshold of 150,000 crowns per m2 (152,051 CZK/m2), which is a 17 percent higher offer. The bid price, which has been rising due to rising costs — mainly materials, energy and market uncertainty — is moving away from sales prices and returning to long-term levels 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 cautious with pricing and they will wait to see how much they can give for,” said Soural. He expects that some developers may even stop projects.
In the second quarter, according to companies, 950 apartments were sold in Prague, which increased the supply 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 that’s 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 something should be done about costs, then on the side of standards and decrees, to admit that houses with a lower level and cheaper parking spaces can be built,” 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.