The number of new Prague apartments sold rose by a quarter quarter-on-quarter to 1,600

The number of new Prague apartments sold in the first quarter increased by almost a quarter quarter-on-quarter and by almost 150 percent year-on-year. There were 1,600 of them in total. However, the year-on-year change could have been influenced by the comparison base from the beginning of 2023, when sales of new apartments were the lowest in the history of the measurement. Falling interest rates and greater availability of mortgages also boosted demand. The prices of new apartments remained almost the same quarter-on-quarter, and the average selling price was 142,073 crowns per square meter. This follows from the analysis of the development companies Central Group, Skanska and Trigema, which its representatives presented to journalists.

Usually, roughly half of the apartments are sold with a mortgage, so the increase in the availability of mortgages had a significant effect on the growth of demand, according to representatives of development companies. According to the latest Swiss Life Hypoindex data, the average mortgage rate at the beginning of April fell from 5.62 percent in March to 5.57 percent.

It thus remains close to the lowest values ​​since June 2022. Interest rates on mortgage loans are falling, although not at the same pace as the base rates of the Czech National Bank (ČNB). At the March meeting, it reduced the two-week repo rate by half a percentage point to 5.75 percent.

The average offer price of an apartment in the first quarter was 152,644 crowns per square meter, so in reality it was about 10,000 crowns higher than the sale price. It was the same in the fourth quarter of last year. Prices did not drop significantly even despite the reduction in the VAT rate for apartments up to 120 square meters effective from the beginning of this year. The reason, according to the analysis, is that most developers reflected the VAT reduction in prices last year.

“The first months of the new year did not change the average price, despite the fact that the prices of apartments in Prague increased in almost a quarter of the projects. Stabilization of the market will mean the limitation of some bonus programs, the return of end clients may also be reflected in less willingness of developers to sell to institutional investors,” said Petr Michálek, chairman of the board of Skanska Residential.

At the same time, he added that due to the input costs, he expects a further slight increase in prices this year, by an average of five percent.

The most apartments were sold in Prague 9, followed by Prague 5, Prague 10 and Prague 4. Roughly 41 percent of the apartments sold traditionally had 2+kk available. Compared to the previous quarter, however, the demand for larger apartments also increased slightly. The highest price per square meter was for 5+kk apartments, while the lowest was for 3+kk and 2+kk apartments.

There were 5,400 new apartments available in Prague at the end of the first quarter of this year, which is approximately 100 less than at the end of last year. Year-on-year, this is a decrease of 2.7 percent, i.e. approximately 150 apartments. According to the chairman of the board Dušan Kunovský, the reason for the decrease is the slow approval of buildings, but also the transformation of new apartments into rental housing.

In the whole of the Czech Republic, according to the analysis, developers sold approximately 1,900 new apartments, their number increased by approximately a quarter quarter-on-quarter, the same as in Prague. The average price per square meter was 98,000 crowns.