New flat prices in Prague rise by almost 20 percent in 2017

Photo: Khalil Baalbaki

The average price rise for new flat in the Czech capital Prague rose last year by around 19.1 percent to reach around 85,223 crowns per square metre, according to a group of the leading developers and builders of new flats in the city.

Photo: Khalil Baalbaki
That rate of rise has been fuelled by low unemployment, higher wages for most Czechs, and a squeeze on the number of new flats coming onto the market. Sales of new flats dropped by 17.3 percent to 5,500 compared with the previous year, according to the figures put together and released by Trigema, Skanska Reality and Central Group.

They expect the pace of price rises to slow down this to around 3-5 percent amid a further narrowing of the supply of new flats coming onto the market, estimated to be around 5,000. But that hike in prices could take the average price to easily beyond the 100,000 crowns per square metre level.

Actually, the price of flats on the books of major developers already exceeded the average sale price last year, standing at around 90,000 crowns per cubic metre, because most of the more expensive flats remained unsold longer or still have to be purchased.

The developers point out that while new flats priced at around 60,000 crowns per square metre made up around half of their offer two years ago, they now account for just two percent of the flats for sale.

Many experts are warning in this light that low earners and young couples with little savings or family financial support have been priced out of the new housing market and could stay that way for good if remedial steps are not taken. The ANO government of prime minister Andrej Babiš made the construction of new flats for young couples and homes for the elderly one of the main promises of its programme.

Prices of new flats have climbed since the middle of 2015 in Prague by 53.5 percent. Over the previous two years the price of new flats went up by just 2.0 percent.

The price development in Prague is reflected in most of the major Czech cities but prices have lagged far behind the capital in smaller towns in economically depressed areas where unemployment has fallen more gradually and wage levels have not climbed so rapidly.