The market for new housing in Brno slowed down significantly last year, but the average price per square meter of new housing continued to rise. In a year-on-year comparison, it increased by 17 percent to CZK 117,000 per square metre. Last year, 758 flats in new buildings were sold in Brno, of which 404 in the first quarter. A year earlier, it was 1,192 flats for the whole year. This is according to an analysis of the new housing market published by Impera Styl director František Šudřich. He has been preparing the market analysis regularly since 2015.
After a busy first quarter, the interest quickly cooled down. In the second quarter 158 flats found buyers, in the third quarter 89 and in the fourth 107 new flats. “The noticeable fall in sales was mainly due to three reasons, namely the uncertainty caused by the war in Ukraine, the rise in base interest rates under the pressure of rising inflation and the mortgage market regulations introduced by the Czech National Bank in April last year. This has made real estate investment unaffordable, risky or financially uninteresting for many people,” Šudřich said.
The low sales are certainly not due to an insufficient supply of new flats, as was the case a few years ago. Currently, there are 1,398 vacant new flats in 56 projects on the market in Brno. Prices of new flats stopped rising around the middle of last year. Although the average price per square metre of an apartment sold for the whole year was CZK 117,000, the offer prices are now on average around CZK 129,000.
This is confirmed by a representative of Trikaya, which also monitors prices on the market for a long time. “The year 2022 has turned the rudder of the average price of vacant apartments in Brno’s new buildings. The upward trend, which began in 2016, peaked in the first half of 2022,” said Dalibor Lamka. However, according to him, the price of new flats started to decline slightly in Q3 last year.
The average price per square metre varies according to the overall layout of the apartment. A so-called studio apartment, i.e. an apartment with a layout of 1 + 1 room, currently costs CZK 135,500 per square metre, while a one-room apartment with an area of 35 square metres currently costs CZK 4.8 million. On the other hand, an apartment of 4+kk and more has an average price of 122,000 per square meter and with an area of 125 square meters it will cost on average CZK 15.2 million.
According to experts, we cannot expect a decrease in the price of new apartments in the coming months. Among other reasons, the prices of construction materials and work have been rising over the past year and developers cannot afford to lower prices. They are therefore rather holding back their construction activity. “We have postponed the launch of new projects. We will now rather sell the flats we currently have on offer. We intend to expand it only minimally,” said Jiří Heinl, sales director of IMOS.
On the other hand, a drop in prices can be expected for older flats. “People who bought flats a few years ago will make a profit on the sale, even if they go down in price. They bought the flats at very favourable prices from today’s point of view. But this is not the case for developers. They are building at current prices, which, like energy, have seen significant increases in the past year. So there is no imaginary cushion for price cuts in new flats,” Šudřich said.
Marek Vinter, chairman of the Association of Brno Architects and Builders, pointed out that the reason for the stagnation in the price of new flats is also the necessary higher standard of these buildings. “The pressure for quality and high standards in new buildings is consistently reinforced by strict standards. In reality, it is not possible to make construction cheaper, nor to provide the market with flats with a lower standard, for example as starter flats. From January 2022, for example, all newly built houses in the Czech Republic must meet the stricter requirements for near-zero energy buildings,” Vinter pointed out.
Source: CTK
