“Thanks to the lowering of interest rates and a more stable economic situation, interest in real estate will continue to grow, both in the capital and in the entire Czech Republic,” said Michal Vacek, CEO of the analytical company CEEC Research.
On the basis of interviews with 51 development companies, she compiled a study on the state and future development of the Czech real estate market. It follows that 61 percent of respondents plan to raise prices, an average increase of 4.6 percent. This is a similar number to which the CNB also calculates in its forecast for the entire market.
37 percent of them intend to maintain the current level of prices, and only two percent declared their intention to reduce prices. According to the consulting company Deloitte, the average apartment in a new building cost 131,000 crowns per square meter at the end of last year, so a 70-meter property cost more than nine million. In her case, the said price increase would amount to about 400 thousand crowns.
The price increase is expected to occur despite the expected recovery in construction. According to developers’ assumptions, the supply of apartments and houses is expected to increase year-on-year across the Czech Republic by 2.4 percent in the first half of the year, and by 2.8 percent in the second half. The number of apartments and houses will increase somewhat faster in Prague, namely by 2.6 percent and 3.2 percent, respectively.
Demand will grow faster than supply
Developers are motivated by the growing interest of buyers for new construction. “Projects whose completion was postponed due to low demand in 2023 will be brought to the market,” outlined one of the reasons for the market revival, Michal Hrbatý, executive director of the company UlovDomov, which operates a real estate advertising portal and also cooperates with apartment owners.
Demand will grow even faster than supply this year, according to CEEC Research. It should be 3.9 percent across the Czech Republic in the first half of the year, and 4.7 percent in Prague. In the second part of the year, the interest will increase even more, when it should range between 5 and 6.5 percent.
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For example, according to Dušan Kunovský, the owner of the largest Czech developer Central Group, not only cheaper mortgages but also a lower VAT rate contribute to greater interest in buying real estate. For the majority of apartments, this has dropped from the original 15 to 12 percent since January.
“The owner-occupied housing market is facing a gradual renaissance. In Prague, it is possible to observe this phenomenon already, in the regions it will follow a similar wave with a slight delay,” stated Karel Branda, operations director of Trigema.
Similarly, others expect demand for real estate to return. Among others, for example, the head of the real estate division of investment company Penta, Petr Palička, or David Šiller, business director of the Wood System company focused on family houses. “We are noticing an increase in demand mainly in the middle class group, on the contrary, we are currently seeing a slowdown in investment properties,” he said.
Experts estimate that at least 10,000 apartments per year would need to be built in Prague alone to satisfy demand. However, this does not work in the long term.
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Tags: Developers preparing raise prices apartments houses People buy faster build
