Prague's new-build supply grows — but prices keep climbing anyway

In the second quarter, roughly 7,000 apartments were on the market in Prague's new-build segment — the highest figure in the past decade, according to data from analytics firm BuiltMind. At the same time, Deloitte estimates that the number of active development projects fell by 4.5%, even as the overall number of apartments for sale ticked up slightly quarter-on-quarter.

Despite the larger supply, prices haven't budged downward: according to the data, the price of new apartments in Prague reached roughly 180,000 crowns per square meter, almost one percent more than the previous quarter.

"Prague's new-housing market keeps growing. The slight increase in available apartments is a positive sign, but on its own it isn't enough to meaningfully ease price pressure in the market. Meanwhile, the number of active development projects dropped by 4.5%. So Prague continues to be defined by limited supply and strong demand," said Petr Hana, head of Deloitte's real estate and construction department.

According to BuiltMind, developers sold 1,458 new apartments in the second quarter — three percent fewer than in the first quarter of the year. Demand is expected to hold at a similar level next quarter, though prices will keep rising.

"We expect prices to keep growing, but at a slower pace than in previous years. The asking price for new builds should climb past 180,000 crowns per square meter, then rise by roughly four to five percent annually. The pace of sales will likely stay in the range of 1,400–1,500 apartments per quarter," said Tomáš Kajuch, chief operating officer at BuiltMind.

According to estimates from developer Central Group and Deloitte, Prague remains one of Europe's least affordable capitals for buying new housing: an apartment in a new development requires 15 to 16 years' worth of average annual salary. Demand for apartments today is also being driven heavily by investors and investment funds, who subsequently rent the properties out.

According to an analysis by consultancy Knight Frank, in the first quarter investment by funds and companies into rental housing exceeded 143 million euros (about 3.5 billion crowns), accounting for roughly a quarter of all real estate investment in the country.

For investors, rental yield relative to purchase price is what matters most, which is why they've increasingly been buying older, cheaper apartments — for instance in the Ústí nad Labem region — a trend that has already pushed up local housing prices there.

Hendrik Meyer, head of the real estate platform Bezrealitky, notes that this rising interest in older apartments coincides with rising rents. According to the platform's data, rental rates across Czechia stagnated or even declined in the first quarter, weighed down by households' financial constraints. In the second quarter, however, rents began climbing again. Prague was the exception, with rents unchanged quarter-on-quarter for the first time since 2021.

Read also: Rental scams in Prague: how to spot a fraud

Source: prazskypatriot.cz