Construction of an apartment building, apartments, mortgage – illustrative photo.
Prague – The number of apartments sold in the Czech Republic fell by more than half last year. A survey by the Czech Banking Association in collaboration with Dataligence, a database of real estate information in the Czech Republic, published at today's press conference showed that sales of older apartments fell by 51 percent, family houses by 49 percent and new apartments by 57 percent. This is the lowest number of sales in ten years. Property prices are rising faster than household incomes.
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“The beginning of 2022 was affected by the culmination of the high demand from the previous year and with it the market selling out. The result was the lowest supply of older and newly built apartments in ten years. A shock change caused mainly by the war in Ukraine occurred at the end of the first quarter. The beginning of the energy crisis, higher energy prices , a sharp increase in inflation, all of this changed people's mood. It lasted throughout the second quarter and was exacerbated by the rise in mortgage interest rates. Because of this, the real estate market practically froze in the second half of 2022,” summarized Milan Roček, head of Dataligence.< /p>
In last year's analysis, data on all realized sales from the whole of the Czech Republic, from large and smaller cities and the countryside, was evaluated. In total, there were more than 61,000 real market transactions for older apartments and family houses that were registered in the land registry in 2022, and more than eight thousand new apartments sold in 2022 by developers.
The prices of houses and older apartments in most of the Czech Republic fell at the end of the year, but their decline was only moderate. Prices reached their maximum in mid-2022 and fell by an average of 4.3 percent by the end of 2022. In a year-on-year comparison, older apartments rose in price by 3.4 percent, pointed out Roček. A square meter of an older apartment in the Czech Republic cost an average of around 49,000 crowns at the end of the year, over 117,000 crowns in Prague.
The average selling prices of new buildings increased by 11 percent, in the Czech Republic to an average of more than 120,000 crowns per square meter, and in Prague by ten percent to 151,643 CZK per m2. The average price in the regions increased by 14 percent to 100,643 crowns per square meter. “Promotional offers, such as a kitchen or a garage space, but – reflected in the absolute value of the price of the apartment – appear as discounts in the order of two to four percent,” pointed out Roček. The reason for the increase in prices is mainly a significant increase in mortgage interest rates.
The analysis stated that in the last ten years, the Czech Republic had one of the fastest increases in real estate prices in the European Union, for the last three years it was 54 percent in the Czech Republic and 24 percent in the EU. “This can also be attributed to the previous period of low interest rates, which have become a tool for saving with a higher yield. There is a shortage of apartments in the Czech Republic, and this is increasing every year. The third factor is the conservatism of households, which consider real estate as a way to store savings,” said Roček.
In addition, the growth of real estate prices bounced back from the development of household income growth. Since covid, wages have increased in the Czech Republic by less than 20 percent, and the prices of family houses and older mortgages by 60 percent, Roček said. According to a comparison of the International Monetary Fund (IMF) and its data, from 2015 to the end of 2021, income disparity in the Czech Republic increased most significantly of the 58 monitored countries.
According to Roček, stagnation is expected this year. There will be a big difference between apartment prices across the country. “As the Czech Republic is small, it is different. The market must be evaluated through the lens of diversity. It will be different in Prague and Brno, in other cities and in the countryside,” he said. According to him, there is room for a drop in prices for older apartments, but due to the high costs of new buildings, they will not be cheaper.
