People started buying new apartments in droves. Prices return to record highs – News

According to them, 3,500 new apartments were sold in the capital in the first half of the year. This is only 500 less than last year. Developers reported 1,900 new apartments in the second quarter, the fourth-highest number since 2011, when companies have been collecting data.

More apartments were sold in a quarter only at the beginning of 2020 and 2021. At that time, the market was driven by very cheap mortgages and people’s efforts to protect their savings for fear of inflation in the period to coming

The huge increase in prices added to the great interest at the time, new and older flats went up in price by around a fifth in a year. “It is not appropriate to accept such a large increase in the price yet, but of course it will depend on what happens on the market,” said Milan Roček, CEO of the analytical company Dataligence.

Developers are already trying to sell new apartments in Prague for the highest numbers. The average bid price rose by 3.4 percent year-on-year to 156,780 crowns per meter. In practice, this means that a 70-meter apartment is advertised for about 11 million, even if the price for which the property is sold is on average about ten thousand crowns per meter lower .

However, it is also slowly catching up to the maximum since the end of 2022. Although it showed a year-on-year decrease of 2.6 percent, this is because retailers did not offer significant discounts until the last fall Compared to the end of last year, on the other hand, it increased by 3.3 percent.

“Flat prices are unlikely to fall further, on the contrary, they can be expected to grow faster,” said Vít Hradil, Cyrrus Chief Economist.

New Czech properties are now among the hardest to find in Europe. Last year, according to a Deloitte study, the Czechs had to save them the longest of the entire continent. They needed 13.3 average annual wages to buy a 70-meter apartment.

It is more difficult for customers to reach discounts that are hidden behind various marketing events such as free kitchens or garages or subsidized mortgages. Developers are gradually canceling them due to the increasing demand. “We are ending all our events, including mortgages with a guaranteed lower rate, on August 31,” confirmed Dušan Kunovský, owner of the Central Group.

Developers could sell up to 7,000 apartments this year, which is around three quarters more than last year. Currently, not only people are looking for their own housing, but also investors are more interested in buying them. In some projects, according to the sellers, buyers of apartment units can be up to 40 percent of the interested parties.

In addition, in recent years, they have been joined by institutional buyers, ie real estate funds or large companies, who easily buy an entire apartment complex. “But their best time is already over. Developers will be less open to offer projects to these investors, who will of course expect volume discounts,” said Petr Michalek, chairman of the board of Skanska Residential.

Furthermore, the pressure on price growth will also be supported by the fact that the supply of new apartments can barely keep up with demand. 2,200 apartments came on the market in the capital in the second quarter, the most in the past four years. At the end of June, only 300 of them remained unsold.

The demand for new apartments is not only strong in Prague. In Brno, according to the analysis of the development company Trikaya, 372 apartments were sold in the second quarter, more than three times more than year after year. It was also the strongest quarter since the covid surge.

According to Dalibor Lamka, executive director of Trikaya and chairman of the board, slightly cheaper mortgages and loosening of regulations of the Czech National Bank brought buyers. Thanks to them, more people will have access to credit. “Both factors are driving housing price growth, albeit only gradually,” Lamka said.

The offer prices of new houses in Brno are similar to those in Prague, already at the highest level. On average, sellers advertise them for 129,400 crowns per square meter. So a 70-meter apartment model costs a little more than nine million. The average price for which buildings were actually listed was 127,500 crowns per meter, an increase of about five percent year on year.

The demand may be supported in the coming months by continued discounting of mortgages. Banks are still keeping interest rates high, but analysts believe they could settle below four percent next year. So they will be close to the point where the repayment of the loan is similar to or cheaper than the monthly rent. This could be an additional incentive for interested parties, why they prefer to go for their own housing.