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The market for new apartments in Prague saw a dramatic rebound last year, with sales rising by 80% year-on-year.
However, despite this surge, demand continues to outstrip supply, driving prices to record levels.
By the end of 2023, the average asking price had climbed to 163,203 CZK per square meter, while actual sales prices rose by 10%, reaching 156,851 CZK per square meter, according to an analysis by developers Central Group, Skanska Residential, and Trigema.
In the final quarter of last year alone, approximately 1,850 apartments were sold, bringing the total number of units sold in 2023 to 7,200โthe second-highest figure in over fifteen years. The only stronger year was 2021, when 7,450 apartments were sold. This momentum is mirrored in the mortgage market, where the volume of new loans increased by 83% year-on-year.
โThe strong demand last year clearly shows that real estate remains a reliable and profitable investment with minimal risk and steady appreciation. I expect this trend to continue in 2024,โ said Marcel Soural, Chairman of the Board at Trigema.
Prices Rising Faster Than Expected
According to the analysis, new apartment prices are rising faster than projections by the Czech National Bank, which has warned that price growth could accelerate due to the persistent supply-demand imbalance. Ongoing issues with the new Building Act and digitalization are expected to further restrict supply, potentially pushing prices up by another 5-10% this year.
Currently, the most affordable new apartments can be found in Prague 9 and 10, where prices average just over 149,000 CZK per square meter. Meanwhile, the most expensive areas remain Prague 1, Prague 2, and Prague 7, where prices exceed 200,000 CZK per square meter. The most significant year-on-year price increaseโ21%โwas recorded in Prague 3.
Several factors contributed to last yearโs price surge, including the introduction of higher-end projects, price hikes on existing developments, the reduction of marketing incentives, and rising construction and design costs.
New Supply Failing to Keep Up
At the end of 2023, 5,700 new apartments were available in Prague. This number has remained stagnant for two years, and analysts warn that previously approved projects are running out, with too few new developments entering the market due to sluggish permitting procedures.
Prague needs to approve at least 10,000 new apartments annually, but by November 2023, the Czech Statistical Office had only recorded 6,340 newly permitted apartments in apartment buildings.
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