Demand for new apartments in Brno is minimal, prices have not changed for half a year
The reasons why investors have ceased to be interested in buying new apartments are mainly the uncertainty associated with the outbreak of war in Ukraine, the growth of basic interest rates under the pressure of rising inflation and the regulation of the mortgage market. Over the past three years, real estate prices have even increased by fifty-seven percent. “An increase in the average prices of sales can be expected this year as well. The annual average is a long period and the inertia of such statistical data is high,” explained František Šudřich, director of Impera style.
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Interested parties will now pay approximately 4.8 million crowns for a thirty-five-square-meter studio apartment, while the average price of a two-room apartment is 7.3 million crowns. Three rooms in a new building in Brno cost an average of 10.1 million crowns, the prices of four or more-room apartments exceed fifteen million. “However, growth practically stopped in the middle of last year, and since then average prices have been oscillating around the level of 130,000 crowns per square meter,” continued Šudřich.
According to the prices of Brno developers, in addition to apartments, the people of Brno bought almost five billion in the year. The greatest interest was traditionally concentrated in Brno-střed, where every third new apartment sold was located. Other popular locations include Brno-sever and Královo Pole. Last year, Brno-jih became the newcomer in the ranking of the most popular parts of the city from the point of view of sold apartments.
The market for new apartments in Brno:
After years of growth and high demand, sales have slowed by more than half.
The reason is the uncertainty related to the war in Ukraine, the rise in interest rates and the regulation of the mortgage market.
The amount per square meter of a new apartment is now around one hundred and thirty thousand crowns.
People therefore expect a drop to one hundred to one hundred thousand crowns per square meter, but experts are skeptical.
So far, only older properties have started to become cheaper, while the prices of new buildings have stagnated.
While many people are waiting for the right time to buy a new apartment, the supply has gradually increased by eighty-three percent. In addition, sellers are preparing various forms of marketing actions with which he hesitates to entice. For example, you can get a free kitchen or a subsidy for an expensive mortgage. However, the prices of new apartments themselves do not fall significantly. “However, the situation is changing for the better. I thought that the real estate market would be subdued after the New Year, but I am hearing from people who want to make an appointment and at least start dealing. That’s a shift,” said realtor Robert Schmidt.
In the spirit of waiting
The mood on the real estate market is currently rather one of waiting. However, experts expect a different development for older properties. In these cases, prices have already started to fall. The so-called panel house segment mostly reacts to such changes, mainly because of those who bought apartments a few years ago and are now making money from their sale despite the fact that they decide to lower the price. From today’s point of view, they bought apartments at very favorable prices.
However, developers are in the opposite situation, for whom such a scenario does not apply. New buildings are being built at current prices, which have seen relatively fundamental changes in the past year. There is no imaginary cushion for reducing prices for new apartments, so a number of development companies prefer to suspend new projects and sell the apartments they already have on offer. “We postponed the start of construction of new projects. We will now rather resell the apartments that we currently have on offer. We intend to expand it only minimally,” admitted the sales director of Imos Jiří Heinl.
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This is precisely the reason why experts expect price stagnation in the coming weeks and for new apartments rather than their decline. However, this year could bring at least a partial stabilization of the real estate market. “I have a lot of scheduled meetings with investors, but they say that we will only meet in March, for example, and they will only buy under different conditions,” broker Robert Schmidt described the situation.
Although it used to be the case that the price was mainly determined by the location, in recent years they bought practically everything that was available. The price differences between new and older apartments gradually disappeared, but now they are showing again. “The current situation without a clear vision of development leads development to great caution, not least the important role of financing. The construction costs thus increased practically manifold, in the form of expensive materials and manpower, but also in the form of extremely expensive financing,” said Marek Vinter, chairman of the Association of Brno Architects and Builders.