Apartments in the Czech Republic fell in price in the 4th quarter on a quarterly basis for the first time since 2013

Apartments in the Czech Republic fell in price quarter-on-quarter in the 4th quarter for the first time since 2013

Apartment building, construction – illustrative photo.

Prague – Apartment prices in the Czech Republic fell in the fourth quarter of 2022 in a quarter-on-quarter comparison for the first time since the beginning of 2013, by an average of 0.7 percent. The real estate market continued to decline. Demand for both apartments and family houses further decreased slightly. Only land remained stable, as did price growth. This follows from the HB Index, which was provided to ČTK by Hypoteční banka, which belongs to the ČSOB group.

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The HB Index is based on real estimates of the market prices of properties purchased by Hypoteční banka's clients through a mortgage loan. The bank published the index for the first time in April 2011.

“The last quarter of 2022 symbolically completed the development of the second half of the year in particular,” said Martin Vašek, chairman of the board of directors of Hypoteční banka and ČSOB Stavební spořitelna. High loan prices and their lower availability in conjunction with according to him, the overall economic situation led to a further cooling of the market.

The pace of price growth also slowed down for single-family homes. In a quarter-on-quarter comparison, it decreased from 2.6 to 1.8 percent. Only land maintained its momentum and prices rose by 4.5 percent.

In the case of apartments, demand continued to decline, similar to the third quarter. “For the entire year 2022, we are recording a 30 percent decrease in interest compared to the previous year. The biggest decrease was in the demand for apartments in the 3+1 and 3+kk category,” pointed out Vašek. High interest rates and a decrease in the availability of apartments, on the contrary, led to an increase in interest in rental housing .The result of lower demand is also an increase in the number of available apartments on the market by 100 percent compared to 2021.

Apartment prices fell across all regions. The Karlovy Vary, Moravian-Silesian and Central Bohemia regions recorded the largest average price declines (by two percent). On the contrary, prices in Prague have remained rather stable for now. The decline in demand has also affected new projects, where prices tend to stagnate. Uncertainties about the future development of prices for both real estate and construction work lead developers to suspend the launch of new apartments on the market in selected cases.

The demand for family homes has also decreased significantly, and for holiday properties it has almost frozen. “There have been no fundamental changes in family houses. Demand is falling and with it the rate of price growth is slowing down. Interest has shifted to smaller, more economical properties, on the contrary, it is very difficult to sell larger houses without reconstruction,” said Vašek.

Limitations according to him, the demand had a positive impact on solving problems with building materials. Most are being built in the Central Bohemian Region and the Brno area. It is also possible to register an increase in interest in mobile homes, container homes or modular wooden buildings, Vašek added.

U although the growth in land prices slowed down very slightly between the quarters, but for the whole year it was land that recorded the highest increase, by 22.2 percent. For price reasons, interest in locations that are more difficult to access and further away from large cities is growing. There is also interest in land , which have certain restrictions for the classic construction of a family house, but allow the construction of a so-called mobile home or an object for temporary housing (an object with a registration number).