When analyzed towards the end of last year (2023), the Prague new construction housing market reflected the delays in the realization of certain development projects due to low sales volumes in the first half of the year and high costs, especially for construction materials. There was a decrease of 2% in the availability of 5,500 new apartments in the capital compared to the previous quarter, mainly attributed to the transformation of some projects into rental housing and the persistently slow pace of issuing permits for new construction. Additionally, until November 2023, only 3,608 apartments in multi-storey buildings were permitted to be built in the capital, which is 12.6% less than in 2022, based on the latest data from the Czech Statistical Office.
According to Marcel Soural, the Chairman of the Board of Trigema Investment Group, the supply of new apartments is insufficient and has resulted in fewer apartments being sold over the last year than before. Given the challenges associated with new construction, the supply is not expected to reach the long-term target of 10,000 new housing units per year, which will further drive up prices, not only in the primary market.
In terms of prices of new apartments, towards the end of last year (2023), the market reacted to the still relatively low demand with a slight decrease. The average sale price slightly dropped by 2.7 percent to 142,511 Czech crowns per square meter compared to the previous quarter, representing a 6% decrease from 2022.
During the last quarter, the base price, excluding customer bonuses, saw a minor increase of 1.4%, reaching 152,482 Czech crowns per square meter, yet reflecting an annual decrease of less than 2%. The persistence of ongoing marketing incentives, promotional bonuses, and introductory prices for newly launched projects remained contributing factors to this trend in the last quarter of the previous year.
“Last year was characterized by marketing bonuses that provided significant advantages to buyers. This year, we anticipate a shift in the market dynamics. I expect that as the supply of new apartments gradually diminishes in the market and thanks to more affordable and accessible mortgage loans, demand will rise. As of this spring, prices are expected to rise again,” mentioned Dusan Kunovsky, Chairman of the Board of Central Group.
According to Kunovsky, prices for new apartments in 2024 could escalate by up to 10%. “And certainly, there will be a significant reduction in customer bonuses,” added the company’s leader.
A slight thaw in the market observed in the last few months of the previous year also points towards a future demand upsurge. Over the past year, demand for new apartments in Prague increased every quarter, reaching 1,300 sold units in the last quarter.