The Czech economy may be peaking now, but the number of flats construction starts in 2018 is expected to be the lowest since the crisis in 2009. At the end of 2017, just 8,100 units were under construction, which is the lowest result since 2014, according to a new piece of research by JLL, while the number of completions (6,176) was a five percent fall from 2016. If anything, the situation will worsen this year with construction to start on just 3,800 new units and the total number of completions falling to 5,000. Prices have been rising accordingly, with a 15 percent jump in 2017 bringing the average price of a new flat to CZK 73,586 per square meter (without VAT). A third of all available apartments cost between CZK 65,000 and CZK 85,000.
“The Prague market continues to have a limited supply of apartments and reduces the possibility of buying new flats in development projects,” says Lucie Mekhail, senior consultant from Small & Medium Investments department. “We do not expect a decline in housing interest, however, it is not possible to clearly answer whether given the rising prices, this is a real estate bubble. Some apartments or houses may become cheaper in the future, however, it depends on the location which can be divided into two groups. The first ones are stable locations, where real estate holds its value. For the second group of locations, which are “non-premium” and in peripheral areas, we can expect property price fluctuations in the future. These are logically more prone to price fluctuations in the real estate market.”
