Analysis: The average price of a new apartment in Prague is rising by about ten percent
Update: 26/01/2023 11:37
Issued by: 26/01/2023, 11:37
Prague – The average selling price of new apartments in Prague rose by 9.9 percent. At the end of last year, a square meter cost 151,643 crowns. This follows from today’s published analysis of the development companies Skanska Residential, Trigema and Central Group. According to her, 3,100 new apartments were sold in Prague last year, which is approximately 60 percent less than the record year of 2021. The value of sales reached 28 billion crowns, 51 percent less.
Data from the residential market shows that at the end of 2021, new apartments were sold for 137,946 crowns per square meter, up from 13,697 crowns at the end of last year. Quarter-on-quarter, the price rose by 2.5 percent. Offer prices for new housing in Prague increased by roughly seven percent to 154,881 crowns, quarter-on-quarter market stagnation was confirmed and the increase was half a percent.
“In the first half of the year, prices rose and in the second half the growth slowed down,” said Marcel Soural, chairman of the board of the investment group Trigema. He pointed out that the statistics from Prague’s city districts are different, so the market is unstable and it is difficult to estimate the situation, according to him.
Despite the slowdown in sales due to expensive mortgages, developers agreed that the prices of new apartments will not fall this year. According to them, the reason is increased costs, which are reflected in higher prices for materials, labor and energy, higher land prices, slow approvals for apartments and a lack of labor in the construction industry. “The investor already feels a lot about all of this during construction,” said Soural.
In the fourth quarter of last year, 550 new apartments were sold in the capital, the same as in the third quarter. 3,100 new apartments were sold for the whole year, while in 2021 it was 7,450 apartments, i.e. 140.3 percent more. “2021 was the strongest year in modern history. If we were to compare last year with 2020, this is a 47 percent drop in sales,” the analysis states.
A survey by the development company Ekospol said last week that 2,400 new apartments were sold in Prague last year, which was the lowest in the last 20 years.
According to Dušan Kunovský, the founder and head of Central Group, interest in new housing is still high, and there is a shortage of new apartments on the market. “Demand is postponed. The market is expected to revive in the spring months and next year, when interest rates on mortgages could already be reduced to three percent, and the monthly mortgage payments could even be lower than the rent,” said Kunovský.
According to the analysis, there were 5,100 new apartments available in Prague at the end of the last quarter of last year, almost the same as at the end of 2020. This was an increase of 8.5 percent quarter-on-quarter, compared to 2021, when the market was practically sold out, the supply is now higher by 79 percent.
In the last quarter, 950 new apartments entered the market, which is the second worst quarterly result since 2017. Petr Michálek, chairman of the board of Skanska Residential, added that very few apartments continue to be allowed. While the construction of almost ten thousand units could start in 2021, it will be roughly half less than last year, Michálek said.