Sales prices of new flats in Prague continue to rise. In the first quarter of this year, they climbed almost 30 percent year on year in the metropolis to an average of CZK 145,749 per square meter. They have risen by 5.7 percent since the end of last year. This resulted from an analysis by the development companies Trigema, Skanska Reality and Central Group, according to which the reason for the increase in the price of flats is lower supply caused not only by inflation and mortgage rates, but also by rising construction work, materials and energy. The uncertainty caused by the war in Ukraine is also reflected in prices.
At the end of the first quarter, those interested in new housing could choose from about 3,200 new flats, which is about a thousand flats less than a year ago. “The offer is still woefully small and this situation is unlikely to change. That is why the apartments are so expensive,” Marcel Soural, chairman of the board of Trigema investment group, told reporters today. “In the first quarter of the year, the sold-out offer was only slightly supplemented, but in order to satisfy long-term market needs, it would have to be at least triple,” said Petr Michálek, Chairman of the Board of Skanska Reality.
The analysis showed that there are practically no apartments with a price below CZK 100,000 per square meter, on the contrary, apartments with more than CZK 400,000 per square meter have been added. “Four years ago, we would not have foreseen such a thing. If the price increases continue, the middle class will probably decide whether to buy an apartment or rent, and rather rent,” Soural said.
Furthermore, the greatest interest is in smaller flats (1 + kk and 2 + kk) and most new flats are being built in Prague 4, 5, 9 and 10. The cheapest prices are in Prague 8, where a square meter costs about CZK 139,000.
Apartment prices are mainly affected by their lack. Developers with a bid price that has approached the sale are delayed because they cannot estimate where it will climb. “That’s why they’re adding a risk premium,” Soural said, citing a dynamic time. “We lived for two years in covid, which tore up supply and demand chains and especially price stability. The economy was crammed with a lot of money that is not covered by labor. Another factor is the war in Ukraine, which deepened uncertainty and spilled over into the construction market,” said Soural, chairman of the board of Trigema investment group.
According to him, the prices of materials, which are in short supply and which are rising sharply, contribute significantly to the prices of flats. “All commodities are going pointlessly. Manufacturers and wholesalers are not only taking energy and labor into account, but they are taking advantage of situations and adding big margins and distorting the market,” said Soural.
According to him, nothing can be predicted in the long run, however, apartment prices could gradually stabilize. “But there is a need to stabilize material prices. If the market does not slow it down, there will be less willingness to give new products. The best pressure is the market,” Soural said.
The prices of older, so-called second-hand flats also rose. In Prague, their average selling price is CZK 129,737 per square meter. This increases the interest in rents. Real estate network brokers RE / MAX recorded a significant increase in the number of apartment rentals in the first quarter of the year, by as much as 20 percent compared to the same quarter last year. “The demand for rent is extreme, but it is not just a war in Ukraine, it may also be a consequence of the fact that buying one’s own housing is more complicated and people do not even have to obtain a mortgage,” said RE / MAX director Jan Hruby.
Rents are also rising in price. According to Trigema, the average gross rent per square meter rose to 348 crowns. RE / MAX states that the tenant will pay an average of CZK 290 per square meter. “A large part of the company will live in rent. It will soon be more common to commute to work. In the Central Bohemian Region, thanks to this trend, the real estate market is already moving more than in the past,” Hrubý added.
Source: CTK
