Rented housing, on the other hand, is growing – most traditionally in the capital, in Brno it has apparently hit its long-term ceiling. This follows from new data from the Quarterly Monitor of real estate prices of the EHS group, which includes, for example, the digital real estate service Bezrealitka or the real estate agency Maxima.
“It seems that the main wave of people interested in their own housing, who were able to finance it with their own funds or with the help of a mortgage, has run out, and owners now have to accept a further cooling of demand. However, this is positive news for buyers – there is a lot of room for further negotiations, including in Prague, which until now has benefited from its privileged position. This is, without exaggeration, the biggest opportunity of the year so far, which may end with the first major easing of interest rates.” mentions Hendrik Meyer, head of the EHS and Bezrealitky group.
“Additionally, new properties may appear on the market. The price can go down radically for so-called lagers whose owners have come to terms with the fact that they will not really get the money they dreamed of, but also for real estate that the owners will not keep due to this year’s wave of cheap mortgage refinancing from 2018.” added Hendrik Meyer.
Prague apartments hit the ceiling
After the summer revival, he put the Prague market in neutral and shows where his ceiling will probably lie by the end of the year. The average price of an older apartment is now around 117.5 thousand crowns – so it has increased minimally. At the same time, the number of properties intended for sale does not decrease significantly, the spring recovery attracted a large number of buyers, and this year’s refinancing of mortgages from 2018 probably also supported the situation.
As part of the price segmentation, apartments with some of the handicaps continue to fall in value the most – in poor technical condition, in an unattractive location or in apartment buildings with complicated ownership, and thus a difficult possibility to invest in their development. Conversely, long-term stagnation cannot be expected for high-quality apartments with a good layout and technical solution.
“Prague will draw on its position even in times of economic upheavals, so I would not bet on a decline. On the other hand, even stagnation is in itself very good news and an impulse that can help in negotiations for all those looking for their own housing in the capital,” mentions Hendrik Meyer. “After a long time, even brick apartments in the wider city center can approach the possibilities of a larger number of households.”
The prices of family houses in the territory of Prague exceeded the mark of 100,000 per square meter for the first time. In this case, however, it is mainly related to the type of real estate that was offered. The summer revival of the market has attracted a number of owners who are trying to sell their property in the long term: these are often expensive new buildings or renovations, but due to specific layouts or aesthetics, it is difficult to find an owner.
Central Bohemia bubble? Demand returned to Prague due to prices, prices fell
At the same time, the third quarter showed how much the Central Bohemian market consists of vessels connected to the Prague market. Stagnant prices in Prague have brought those in Central Bohemia down to the level of the end of 2022. And that is the case for both apartments and houses. An apartment in the Central Bohemian city sold on average for less than 74,000 crowns per square meter, and a house for 61,000 crowns per square meter.
At the same time, Central Bohemia’s offer continues to be varied. Reconstructed apartments in the centers of catchment areas and luxury family residences are complemented by family houses under construction or buildings requiring complex reconstruction. The segment of mobile homes and light wooden constructions also significantly strengthened.
“In short, the Central Bohemian region lost Prague’s purchasing power for a short period of time, which is moving back outside the city limits. This is, of course, good news for locals and for those who want to continue to exchange a longer travel time to Prague for a better price or better availability.” thinks Hendrik Meyer. “Furthermore, from my point of view, a great investment opportunity is being born in the Central Bohemian Region with such a large decline. Average prices will rise again depending on what is happening on the metropolitan market.”
Apartments in Brno and the surrounding area stagnated for the ninth month in a row
The story unfolds in an interesting way in the South Moravian region. Apartments here have been stagnant for three quarters of the year, and in autumn, after the initial rise, the prices of family houses fell again. These are now, in the traditionally homesteading region, essentially at the same level as two years ago. However, the Prague trend of suspended offers has also partially moved to Brno: A number of owners preferred to stop offering their property rather than have to negotiate and likely discounts during the sale. According to Meyer, finding a quality apartment in Brno, for example, will be more difficult than in the past months, when the offer was, on the contrary, above average.
“In the case of family houses, on the other hand, it is possible to reach very interesting prices basically on the borders of Brno itself, not to mention more distant settlements. Although the number of properties on offer is rather decreasing, for example the segment of houses under construction or family houses around five years old is still relatively strong. In the case of apartments, a good opportunity arises in the catchment areas of the metropolis. And prices could now also fall in a number of other former district towns, from where the demand will ‘flow’ to Brno itself because of the prices.” mentions Hendrik Meyer.
Rents are growing as expected, the pace is likely to increase
Rental housing prices also continued to grow. They traditionally rose the most in Prague, where they stopped at a value of 347 crowns per square meter. Growth in the capital is based not only on new rental opportunities, which often strengthen the more expensive segment of premium rentals, but also on the continued movement of Prague residents to rent. To some extent, they also respond to the season – the end of the third quarter raises prices due to high demand from university students.
On the other hand, the drop in the average price of rental housing in the Central Bohemia region is surprising. Rent growth has stopped even in lucrative locations near backbone railways with good connections to the capital. In this case, the reason may be the increasing supply, because houses and apartments for rent in Central Bohemian cities are increasing at a high rate. And it is also impossible to ignore the imaginary economic rent ceiling, which in the case of households looking for rent in Central Bohemia is around the 250 crowns mark per square meter of rental area.
For the third quarter in a row, prices have already fallen in Brno and its metropolitan ring. On average, an apartment was rented here at the beginning of autumn for 270 crowns per meter. And this despite the fact that we are talking about the second largest university city. Here, too, it is likely that the situation is related to the lower economic strength of households that are looking for rental housing in the Moravian metropolis and to whom the owners are willing to make partial concessions after the wave of price increases.