Joint analysis by Trigema, Central Group and Skanska reveals that the value of apartments sold last year exceeded 57 billion crowns.
The enormous demand for homes in the capital city, driven in particular by attempts at keeping one’s savings secure, and consistently advantageous interest rates and excess household savings has led to the most apartments since 2011 being sold last year. For comparison: in 2020, 5,800 new apartments were sold in the capital city, 5,600 were sold a year previously, and 5,000 apartments were sold in 2018. Exactly seven thousand apartments were sold during the period looked at only in 2015.
“Last year was the strongest for sales of the past 13 years, since we’ve been assessing the primary market. Last year’s sales reflect in particular the effort by buyers to protect their savings against inflation, and the knowledge that an apartment is a safe asset which as well as growing in value can also generate revenue. We can say, then, that the drivers of the growing demand were private, and increasingly also institutional, investors,” says Marcel Soural, Chairman of the Board at Trigema investment group.
Year-on-year, sales of new apartments in the capital rose by almost 28 percent, specifically by 1,650 sold apartments. This is revealed in an analysis by Trigema, Skanska and Central Group. In the last quarter of the year, 1,350 new apartments were sold in Prague, the same number as in the third quarter. In a year-on-year comparison, this is a fall of 700 apartments. Outside the capital city, a total of 9,621 apartments were sold last year.
Also extremely high last year was the demand for financing homes through mortgages. The volume of mortgages provided last year reached 430 billion crowns, roughly a seventy percent increase compared to the previous record year of 2020. Last year, banks provided 135 thousand mortgages.
Another record, this time in terms of a fall, was the supply of available apartments. Last year, these came to an average of only 3,300, which is 1,980 fewer available apartments than in 2020. This is historically the lowest supply of apartments on the market over the last ten years. The supply was similarly low only in 2017 when 3,725 apartments were available for purchase.
In 4Q 2021 there were 2,850 apartments available for sale, which is 100 available apartments more than in the previous quarter, but representing a fall of 2,100 available apartments in a year-on-year comparison. Compared to the last quarter of 2015, however, it is greater than a 50 % fall in the supply of new real estate properties.
“In 2020, there were almost 6 thousand new apartments available, and now the number is less than half. The situation is absolutely critical. And nothing is likely to change in the coming years, because the new construction act which could have helped, is to be postponed and changed. Yet a faster approval process is in the state’s economic interests. In Prague alone, there are plans for more than 130 thousand new apartments, and just through VAT these could give the state 155 billion crowns,” says founder and head of Central Group, Dušan Kunovský.
The increasing gap between demand and supply has also impacted the increase in prices. The average price for a new apartment sold in the capital in the last quarter of last year reached a record 137,946 crowns per m2, which is almost 28 % higher in a year-on-year comparison. Over 80 % of apartments sold have a price of over 120 thousand CZK/m2 and in the 4Q 99.2 % of apartments in Prague were sold at a price of over 100 thousand CZK/m2.
The estimated value of sold apartments exceeded 57 billion crowns, which is a year-on-year increase of 48 %. The annual value of apartments sold has doubled over the past 6 years. The reasons are evident – the continuous increase in apartment prices and the current increase in demand.
The most expensive apartments were traditionally in the centre of Prague, specifically in Prague 1 and 2, which also had the lowest supply of apartments. Prices in other city neighbourhoods were more or less equal. The highest demand for new homes was seen in Prague 4, 5 and 9 – 53 % of all apartments sold in Prague were located in these city districts.
The largest group of apartments sold in the final quarter of last year were one-bedroom apartments, representing 42 % of the total number. Behind one-bedroom apartments in terms of sale were studios, comprising around 23 % of all apartments sold, and 2-bedroom flats which took a 22 % share of all sales in the 4Q.
Not just the sales price, but also the bid price of apartments rose. According to the analysis by Central Group, Trigema and Skanska, the bid price at the end of December came to 144,408 CZK per m2, 5 % higher than in the previous quarter and around 24 % higher than a year ago.
Such a marked year-on-year increase in prices is the result of a number of factors. The pandemic saw a boom in buying in the new apartments market, which also related to purchasers wanting to keep their savings safe. A low supply caused by slow approvals for buildings also had a significant impact on price increases, alongside record prices of materials, labour and energy. This was all amplified by an electoral year which unfortunately again did not help in terms of market predictability, nor in terms of speeding up approvals processes,” says Petr Michálek, Chairman of the Board at Skanska Reality a.s.
Shortages of land and its rising price also had a significant impact on the rising prices of apartments. Since 2015, the average price of Prague land has gone up by around 130 %, and by 20 % annually. The supply of land available has also reduced by a third compared to 2015.
