What kind of apartments do Czechs buy? The current state of the Czech real estate market
What trends are influencing Czechs' choice of housing in 2023? Which districts of Prague are the most popular among buyers? What challenges does the market continue to face? More on this below.
According to the conducted by the development companies Central Group, Skanska Residential, and Trigema, the current year has been successful for the sales of new apartments in Prague. Interest in real estate continues to grow, and this trend has been maintained for the second quarter in a row. So far, more than 1,650 apartments with a total value of less than nine billion crowns have been sold, an increase of five percent compared to last year.
At the same time, new apartments are still asking for more than 150,000 CZK (about $6820) per square meter.
Sales leaders and popular destinations
A popular destination for buying new real estate is the Prague 9 district, where 347 apartments have already been sold. This district, together with Prague 5, shows more than 100 percent growth in demand. In addition, customers are showing great interest in Prague 4, where 157 new apartments have been sold.
The most popular layouts
The most popular apartment types remain 2+kk (a two-room apartment with one separate room and another combined with a kitchen; editor's note) and 1+kk (studio apartments), which account for 71% of demand. This is due to their high profitability, which means that they are attractive from an investment point of view. It is also worth noting that smaller apartments make up two-thirds of the supply on the market.
Factors influencing the growth of demand
The increased interest in real estate can be explained by several factors. Slower inflation, lower energy prices, and less uncertainty in the future have created a more favorable atmosphere for investing in real estate. Improved mortgage terms have also attracted new buyers to the market, including those who had previously put off investment.
“The population continues to reinforce the view that the current time is not a bad time to make major purchases. Although there are still doubts, one cannot help but notice a significant improvement in the overall mood compared to previous months,” notes Marcel Sural, head of management at investment company Trigema.
“The desire to buy real estate in the Czech Republic is also actively increasing on the part of large investors. They are reacting to news of a global increase in house prices over the next ten years. According to a study conducted by the Ifo Institute and the Institute for Swiss Economic Policy (IWP), the average annual nominal growth rate will be nine percent. Thus, there will be no more favorable conditions for buying an apartment than this year,”—emphasizes the expert.
Challenges in the real estate market
Nevertheless, the market faces some challenges. The lack of authorization documents and the slow construction process have led to a shortage of supply on the market. Experts believe that twice as many new apartments will be needed to meet the demand. In addition, sales are affected by the difficult situation in the construction industry and the growing rental housing market.
The situation in the regions
Similar trends are observed in the real estate markets of the Czech Republic. The first half of this year showed a 23% year-on-year decrease in demand, but compared to the first quarter, sales growth amounted to 30%.
The strongest regional markets are still the South Moravian and Central Bohemian regions, where 500 apartments were sold during the first half of 2023. The overall average market value remains stable at CZK 94,435 ($4300) per square meter, but fluctuations between different regions can be seen between 67,000 and 127,000 CZK ($3000-$5800) per square meter, including value-added tax.
Small apartments that are for sale in the Czech Republic right now
Minimalist apartment in Prague
A small one-bedroom apartment of 31 m² in the Prague 8 district of the Czech capital is for sale. The interior is done in minimalistic colors. Furniture is also included in the price, although there is not much of it.
The apartment is located on the third floor of a five-story brick building. The price, according to the ad, is €132,210.
Apartment with terrace in Karlovy Vary
An apartment with a 1+1 layout and a small terrace is now for sale in Karlovy Vary. The area is 49 square meters. The apartment is very bright and has been recently renovated. There is a parking lot near the house.
If you buy this housing, you will have at your disposal the parks and the beautiful nature of Karlovy Vary. The Colonnade with mineral springs is a 10-minute walk from the house.
The price is €140,400.
Budget apartment in the Ustecký Region
A much cheaper option than the previous ones is this apartment in okres Most, one of the seven districts of the Ustec Region. The layout is 1+1, and the floor area is 27 m². The apartment is located on the second floor of a panel house.
Near the house, there is a kindergarten, school, stores, public transportation, etc.
The ad says that the price of the apartment is just over €30,000.