The growth in sales prices of new apartments in Prague stopped quarter-on-quarter in the second quarter of this year. The average price of the apartment sold was CZK 145,783 per square meter. From the analysis published today by the development companies Trigema, Skanska Reality and Central Group, it follows that the unavailability of rising mortgages is mainly manifested, and 950 new apartments were sold in the metropolis, which is a year-on-year drop of almost 65 percent.
“The market is slowing down, prices and purchases are being held back, and the appetite of investors to buy new housing has decreased dramatically. We have reached the top and will remain there for some time,” estimated Marcel Soural, chairman of the board of directors of the Trigema investment group, during the presentation of the analysis.
Compared to the first quarter, the selling price of apartments in the capital rose by CZK 34 per square meter. It is roughly 23 percent higher year-on-year. “Recently, prices have been stabilizing and have only increased by about five percent since the beginning of the year. Overall, we expect growth of up to ten percent this year,” said Dušan Kunovský, founder and head of Central Group.
According to developers, the unavailability of mortgages caused by the sharp increase in the basic interest rate affects the sales of apartments the most. Since the beginning of the year, there have been half as many mortgages negotiated. “The current situation on the mortgage market has practically overturned the structure of buyers. While in the past the number of clients who financed new housing with a mortgage prevailed, today this ratio has turned in favor of investment purchases,” added Petr Michálek, CEO of Skanska Reality.
Growth also slowed down for the offer price, which nevertheless exceeded the threshold of CZK 150,000 per sqm (152,051 CZK/sqm), which is 17 percent more year-on-year. The bid price, which has been rising due to rising costs – mainly the prices of materials, energy and market uncertainty – is moving away from the sale price and returning to a long-term level of around a five to ten percent difference, the data shows.
“You don’t know what’s going to happen in a month. That forces developers to be very cautious with pricing and they’ll wait to see how much they’ll be able to sell for,” said Soural. He expects that some developers may even stop projects.
In the second quarter, according to companies, 950 apartments were sold in Prague, thanks to which the offer increased to 4,150 apartments. This is almost a quarter year-on-year increase. Still, according to the analysis, this is 15 percent below the long-term average and more than 50 percent below the level that could sufficiently saturate demand. In order to be able to meet the needs of the market, it would have to be roughly double at the moment, Soural said.
Soural does not expect newly built apartments to become cheaper in the foreseeable future. And that’s also because of the legislation. “Which orders houses and flats to be built above standard. We build the best flats in Europe and that costs something. If something should be done about the costs, then on the side of standards and decrees, to admit that it is possible to build houses of a lower standard and cheaper parking standing,” he stated.
Different figures, but a similar trend is also presented by competitor Ekospol. On Monday, he said that the average price of a new apartment in Prague with a size of 55 square meters increased by 22 percent year-on-year to 142,740 crowns per square meter. In the first half of this year, according to the company, 1,540 new apartments were sold in the capital, which is almost three times less than last year. According to her analysis, this year’s sales are the worst in the 15 years that the company has been monitoring them.
Source: CTK
