The real estate market in Brno hasn’t thawed just yet. Data from developer Trikaya shows that only 95 units were sold in Q4 2022. This while the number of new flats continued to grow with more than 1,500 flats on the market at the end of the year. The situation has led to a drop in prices as the average price per square meter in a new building slid 2% during the last quarter from the record high seen in 2Q.
“The fourth quarter of last year confirmed the most significant real estate trend of last year: A cooling of the market, and not just new construction. Although it was slightly more successful than the previous quarter, a return to pre-Ukrainian invasion numbers isn’t on the horizon. This can be clearly seen in that more units were sold in January of last year than in the entire second half of 2022,” Trikaya Executive Director and Chairman of the Board Dalibor Lamka said.
Only 95 new flats were sold in Brno during Q4, and by coincidence this number is higher than it should be because several contracts and agreements were negotiated throughout the year and were only completed in November. A total of 1,547 flats were on offer at the end of the year, compared with 1,042 in January 2022.
The exceptional November results also increased the average price of per square meter by nearly 8% to CZK 131,176. However, the real price started to decline slightly, which can be seen in the current average price per square meter hovering just below CZK 125,000.
“With a slight delay behind the slipping demand, we saw a stagnation and even drop in the prices of new construction, which was most pronounced in 4Q. This was not a significant decline, more of a little slide, which didn’t affect all types of new buildings. We can say that more energy efficient units and those in popular locations will always be more resilient to price pressures than normal flats with a C energy rating,” Lamka added.
“2022 saw a reversal in the development of flat prices in Brno’s new construction. The increases that began in 2016 culminated in the first half of 2022 with prices rising from CZK 55,600 per square meter up to CZK 127,200 over six years. However, prices started to decline slightly in 3Q, and they are now at the 2021 level,” Lamka explained.
Compared with 2021, which saw a record number of new flats sold since the economic crisis (1,192), the real estate market has cooled significantly. Although flat sales continued to be robust in 2021 despite rising mortgage rates, 2022 saw a deceleration with only 618 sales. Lower demand gradually affected the average price per square meter, which had reached CZK 127,345 in May 2022, but has gradually dropped to CZK 123,824 in December.
The end of the year also suggested what the beginning of 2023 will look like. Several hundred new flats were put on the market, suggesting the growing supply will continue to fuel falling prices, although the trend may not be that significant.
“The conclusions of the analysis are sound in saying that buyers will have a tougher time in the future residential real estate market. It will be hard to find buyers in an environment with high mortgage rates and exceptionally low consumer confidence. In light of the ongoing drama on energy markets, we can expect extreme caution and a strong preference for energy efficient living,” Cyrrus Chief Economist Vít Hradil said.
