Demand for new buildings in Prague and Brno fell by a quarter
Mortgage rates rose by roughly six percent, and mortgages were negotiated for 80 percent less. Hand in hand with this, sales decrease. According to Ekospol, the demand for new apartments in Prague is the lowest in 15 years.
There is no interest in housing loans, the mortgage market has fallen by 80 percent
“There is a sharp drop in it, 75 percent is enough. But the high price persists,” Deloitte summarized for July and August.
The average selling price of new apartments in Prague in the third quarter was 147,884 crowns per square meter. According to the companies Skanska, Trigema and Central Group, it was used by 17 percent year-on-year.
However, slight discounts from the advertised prices are applied when the average offer prices of apartments exceeded 154 thousand crowns per square meter.
Older apartments, houses and cottages are getting cheaper
The difference between the price in the offer and the sale is on average CZK 6,200/m2, so for an apartment with a size of 54 to 65 m2, the discount can amount to around 335 to 400 thousand crowns. So it is not too much for an apartment for eight or nine million crowns.
Slight discount from high prices
In order to maintain the price, developers put fewer units for sale than they have completed. In the third quarter, Deloitte completed projects with 513 apartments, but only 362 of them were put up for sale. Nevertheless, the supply of vacant new units in Prague has increased by 60 percent. Since the beginning of this year, 2,550 new apartments have been sold in Prague. Already in March and April it was clear that the number of buyers was decreasing. According to Deloitte, in this period prices began to fall in five city districts of Prague, the most in Prague 7, where the drop was 5.5 percent.
However, Prague 7 is, I believe, the most expensive district with an average price of CZK 204,500/m2. On the other hand, new apartments in Prague 10 are the cheapest in the capital, with an average price of CZK 137,500/m2.
“The market is frozen. We may postpone some projects,” announced the head of Central Group, Dušan Kunovský. However, the developers have already launched many spectacular projects.
Rent makes high demand more expensive
For example, the real estate company PSN plans to build three thousand apartments in 25 projects in Prague.
According to the Sreality.cz website, 115 apartments are offered in the category of development projects. Smíchov, Troja, Vysočany, Žižkov, Košíře dominate. The price tag for a 2+kk, 52 m2 in Starokošířské Street is eight million crowns; for 54 m2 in Podbělohorská street, almost 9.8 million.
Older Prague apartments are 20 percent cheaper than new ones. Their average price is 125,442 crowns per square meter and has not increased.
Two million cheaper
The offers in construction-anchored locations near the metro in houses built ten or twenty years ago are interesting. The price is lower by up to two million crowns.
The advantage is an already established community of owners and when SVJ has something saved in its account. New 2+kk today are also four to six square meters smaller than those built twenty years ago.
For example, in Prague’s Letňany, in Zlonická Street, eight meters from the metro, a 2+kk, 59 m2, in very good condition is offered for less than 6.5 million crowns. The price includes a cellar, a kitchen including appliances, a wardrobe in the bedroom. There is an elementary and kindergarten school, shops, and a park nearby.
Zero sales in the center of Brno
Apartment sales in Brno fell to the lowest level since 2013 in the quarter of the year. Data from the third company Trikaya of new units shows that only 700 units found buyers. While in the period from April to June, the price of new buildings climbed over 130,000, now it is below 121,000 per square meter.
At the beginning of September, there were over 1,230 new apartments on offer in Brno. The largest number of units, thirteen, found buyers in Bystrec, while the center reports zero for new buildings. Only four out of 260 new apartments were sold in Zábrdovice. “Twelve months we can get by without any further sales. But it’s not forever,” says Brno developer Tomáš Kaláb.
New apartments will become cheaper when costs come down