Houses under construction – apartments – construction cranes – mortgage – illustrative photo.
Prague – Due to lower interest in owning an apartment last year, roughly 38 percent of developers had to reevaluate some of their projects and offer rental housing instead of apartments for sale. This follows from a survey, the results of which were presented today at a press conference by CEEC Research's director of operations, Petr Ondrášek. According to him, approximately 21 percent of developers plan to increase the price of their properties by an average of five percent in the coming months, 62 percent want to maintain the current prices and 17 percent will reduce prices.
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More than half of the developers expect the demand for rental apartments to continue to grow. Even so, the number of those who prefer their own housing should prevail in the Czech Republic, said Ondrášek. According to him, about 76 percent of developers are currently only building apartments for sale. Companies that also focus on rental housing plan to allocate an average of 36 percent of their projects to these apartments, the survey found.
“Most development companies continue to focus on the construction of projects for the subsequent sale of apartments because, if they have other projects ready to be implemented, they need to reinvest their own resources, which are important for every project, even in the case of bank financing,” said the executive director in a press release of CEEC Research Michal Vacek. According to him, approximately 62 percent of developers in the Czech Republic use bank loans to cover projects.
Demand for real estate in the Czech Republic should fall by 1.2 percent year-on-year in the second half of this year, mainly due to high mortgage rates, the survey found. According to him, in the first half of 2024, growth of 0.5 percent is expected in the entire Czech Republic. In Prague, demand should rise by 1.5 percent in the next six months compared to last year, and by 2.9 percent in the first six months of the following year, Ondrášek said.
On the contrary, the supply of real estate in the Czech Republic will probably increase by 0.4 percent year-on-year in the second half of this year, and growth will accelerate to 1.4 percent in the first half of the following year, Ondrášek said. In the case of Prague, year-on-year growth of 0.8 percent is expected in the next half of this year and 1.4 percent in the first half of 2024. Ondrášek added that developers had to postpone some projects due to the uncertain economic situation and high interest rates. Companies that build in less desirable locations will also have to make real estate cheaper due to falling demand, he said.
According to Minister Ivan Bartoš (Pirates), the Ministry of Regional Development wants to support the construction of affordable rental apartments more. According to the survey, almost a fifth of developers already cooperate with municipalities on these projects. About 61 percent of them would then be interested in getting involved.
“If they agree, private companies will, for example, get the opportunity to build on municipal land and get a favorable combination of subsidy and credit. We are aware that it will be for both parties to represent a certain challenge. We will therefore offer local governments professional assistance with the preparation of project financing. Construction companies, on the other hand, will have to deal with a longer payback period for their investments, but the advantage for them will be a lower level of risk thanks to reduced costs,” said Bartoš.
