The price of new Prague flats at the end of last year rose by CZK 850 per square metre year-on-year to CZK 147,900. Compared to 2022, 52 percent more flats were sold, but the reason is a comparison with the weak sales of the previous year. A total of 3,650 new flats were sold in the capital last year, the second-worst result since 2012, when comparable data is available, this is according to an analysis by the property developer Ekospol. On the other hand, the supply of new Prague flats last year was record-breaking. Last year, 4,750 new flats appeared in the price lists of Prague developers, the company said.
“Sales of new flats recovered slightly last year, but it is still not a great glory. This is mainly due to unaffordable and expensive mortgages, with mortgage rates reaching historic levels and being up to three times what they were two and a half years ago. Investors with their own funds have not been able to make up for this shortfall. Double-digit inflation and the associated fears of households of an uncertain economic future were also a problem,” said Evžen Korec, chairman of Ekospol’s board of directors.
Last year, the previous sharp rise in house prices ended and by the end of the year they started to stagnate quarter-on-quarter. Their price dropped by an average of CZK 300 per square metre compared to the summer. According to Korec, prices of new flats in Prague have hit their ceiling due to expensive construction work and materials, lack of available building land and record high mortgage rates. New apartments have thus become unaffordable even for the middle class.
According to the analysis, sales of new flats in Prague rose sharply in the spring months, but did not change much later. From March to the end of the year, a comparable number of flats were sold in each quarter, with 1,100 in the last one. But the year before last, the Prague residential market was already hit by unaffordable mortgages and the uncertain economic situation. In the whole of 2022, developers in Prague sold 2,400 new apartments, which was the lowest in the last 20 years. This was the same number as in the strongest second quarter of 2021 so far. Year-on-year, sales in the capital fell 63 percent the year before.
There are currently more homes on the market than are being sold, causing supply to outstrip demand, the company said. Compared to the end of 2021, there are twice as many for sale. This should lead to new Prague apartments becoming more affordable again this year, Korec said.
Swiss Life Hypoindex data shows that the average mortgage rate fell to 5.96 percent in early January from 6.02 percent in December. It fell below the six per cent mark after a year and a half. The monthly repayment of a mortgage loan for CZK 3.5 million agreed up to 80 per cent of the estimated price of the property with a maturity of 25 years and an average offer rate of 5.96 per cent fell by CZK 117 to CZK 22,472 in January. Compared to January last year, the monthly instalment decreased by more than CZK 800. However, compared to June 2022, it is still almost CZK 550 higher.
Source: CTK
