The real estate market in the Czech Republic has been experiencing growth in all types of real estate since last spring in terms of the number of transactions. Sales of new-buildings almost doubled year-on-year in the last quarter of 2023, while older flats saw a 49 per cent increase and detached houses a 45 per cent rise. But in the second half of 2022, the market plummeted. That’s according to data presented to reporters today by the Czech Banking Association and Dataligence.
“Especially in the second half of 2023, the market was already much more active than in the previous four quarters. Thus, we are gradually approaching the normal behaviour between supply and demand that existed before the war and before the exaggerated boom of 2021,” said Dataligence CEO Milan Roček. In fact, the year-on-year comparison is now with the quarters in which the fewest homes have been sold in 20 years, he pointed out. Thus, he said, a better assessment of the situation is that there was similar activity at the end of 2023 as at the end of 2020.
According to the association, the price development should be assessed in the context of the varied development in the individual quarters of the last two years, when prices declined mainly between the third quarter of 2022 and the second quarter of 2023 and, on the contrary, from the third quarter of 2023 they were already stagnant or slightly increasing. Prices of older flats thus decreased by only 4.4 per cent in the fourth quarter of last year compared to the last quarter of 2022, with the average square metre costing CZK 60,000.
Brick houses held a significantly higher price against prefabricated houses, the data shows. According to the data, the price drop for older flats was more pronounced in Prague, where the fall was around 6.8 percent, and it was similar for new buildings in the capital. On the contrary, at the national level, the prices of new-builds fell by only 0.1 per cent during 2023. People paid 5.5 per cent less for detached houses, but they became 0.5 per cent more expensive in Prague.
The gap between household incomes and property prices has narrowed, according to Jakub Seidler, an analyst at the banking association. The Czech Republic has improved slightly in international comparison, but the imbalance between property prices and household incomes persists. From a longer-term perspective, the Czech Republic is one of the countries with the highest growth dynamics in terms of house prices in the EU, despite a slight decrease in price last year. Over the last ten years, house prices in the Czech Republic have risen by 125 per cent, while the EU average was 55 per cent.
The housing market is expected to recover further, according to experts. Seidler expects that if demand grows, marketing incentives from developers, which were primarily behind the slight decrease in prices of new buildings in the first half of last year, will be reduced. For older flats, he expects that, as in the past, the development of prices of older flats will influence the development of prices of new-build flats, and the trend in 2024 in the market for older flats will be a slight increase in prices.
Source: CBA and CTK
