Prices for new apartments in Prague reach highest point in history

Demand for new apartments in Prague is on the rise, with prices for new buildings now reaching a record-high, according to new figures. In the second quarter of this year, the average offering price of new apartments in the Czech capital exceeded CZK 156,000 per square meter. Analysts believe this trend will only continue for the rest of this year. 

According to a recent analysis from development companies Central Group, Trigema, and Skanska Residential, rising interest in new apartments is attributed to falling mortgage interest rates and the returning deferred demand from the previous two years. 

Developers do not expect prices to decrease in the future, citing the Czech National Bank's estimate of a 5-percent increase in prices this year. Small one- and two-room apartments are in high demand, making up 72 percent of all sales. In the first half of this year, 3,500 apartments in new buildings were sold in the capital, more than double year on year.

"The interest in new apartments is huge now. Thanks to the falling interest rates, the mortgage market is significantly reviving," Dušan Kunovský, the head of Central Group, told Czech media outlet E15.cz. As a result, Kunovský's company has decided to end all marketing and discount events, which were used to boost sales in previous years.

In Prague, 1,900 new apartments were sold in the second quarter, which is the second-highest number of apartments sold in one quarter in the last decade. It is also a 90-percent year-on-year increase.

While the demand for new apartments in Prague is on the rise, the supply is insufficient. In the last quarter, developers put the most apartments on the market in the last four years, with 5,700 new apartments available by the end of June. However, this is still not enough to meet the growing demand.Developers urge the government to accelerate construction permits to increase the supply of new apartments.

According to the latest data from consulting firm Deloitte, Prague is the second-least affordable city in Europe when it comes to purchasing your own new apartment. On average, 13.5 annual wages are needed to buy an apartment in a new building in Prague.

Deloitte says that this trend is expected to continue in the near future. Experts expect prices to tick up by up to 5 percent on average in Prague.