Czech apartment prices fall for the first time since 2013

Prices fell in all regions across the country, but the quarter-on-quarter drop in Prague was the lowest. Staff

Written by Staff Published on 14.02.2023 14:19:00 (updated on 14.02.2023) Reading time: 2 minutes

The Czech real estate market continued to fall in the fourth quarter of 2022, with lower demand for both apartments and family houses. Apartment prices fell for the first time since the beginning of 2013 when compared to the previous quarter by an average of 0.7 percent.

A quarter-on-quarter decrease in apartment prices was seen across all regions, according to the HB Index compiled by Hypoteční banka and ČSOB Stavební spořitelna.

The decline in demand also affected new projects, where prices tend to stagnate.

The Karlovy Vary, Moravia-Silesia and Central Bohemia regions recorded the largest average price declines, by 2 percent. Prices in Prague have remained relatively stable falling by just 0.1 percent on average.

The HB Index, first published in 2011, is based on real estimates of market prices of properties purchased by Hypoteční banka's clients through a mortgage.

Smaller houses in higher demand

In the case of family houses, interest is shifting to smaller, less energy-demanding properties, according to the index. Currently, it is very difficult to sell larger houses that have not been renovated.

"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 Hypoteční banka and ČSOB Stavební spořitelna.

According to him, the high mortgage prices and their lower availability in connection with the overall economic situation led to a further cooling of the market.

The pace of price growth also slowed down for single-family homes. Only land maintained its momentum, with prices rising by 4.5 percent.

Demand in 2022 down almost 30 percent

Demand for apartments continued to decline, similar to the third quarter. The entire year of 2022 saw a 30-percent decrease in demand compared to 2021. The biggest fall was in the demand for apartments in the 3+1 and 3+kk categories.

High mortgage interest rates have led to an increase in interest in rental housing. The lower demand for buying flats has prompted a rise in the number of available apartments on the market by 100 percent compared to 2021, according to Vašek.

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