16. February 2022
Market Report H2 2021: The Prague Residential Market Through the Lens of Svoboda & Williams
All of 2021 was marked by record-breaking demand for real estate and the rising prices thereof, neither of which slowed down at the start of the year despite expectations that they would. The property segment long monitored by the Svoboda & Williams real estate agency also experienced growth. The events of the past year are the focus of the eighth edition of our Market Report.
One of the main motivations of buyers that drove prices and demand for properties upward was a desire to protect their savings against inflation. Uncertainty about the future of the real estate market also played a role, as it’s impossible to know when property prices will peak. In 2021, clients of Svoboda & Williams paid an average of CZK 152,043 per sq. m. for new builds, i.e. 12.1% more than in 2020. The price per sq. m. for resales reached CZK 132,062, an increase of 10.6%.
These figures show that the average prices in the segment monitored by Svoboda & Williams don’t replicate the sharp growth in prices in the mainstream property segment during this period of good economic indicators. Inflation is most evident in the prices of apartments in new projects, due to the large volume of increasingly expensive building material and construction work.
Svoboda & Williams’ analysis also shows that average monthly rents have started to rise significantly. As expats and foreign students returned to Prague after the easing of pandemic measures, demand for rental properties recovered robustly, which also drove up the price of the average rent for an apartment in the segment monitored by Svoboda & Williams. According to the Rental Price Index by S&W + VŠE, it grew by 5.7% up to CZK 30,900 per month.
The analyses in the Market Report are based on sales and rental transactions generated by Svoboda & Williams’ activities, to which are added data on real estate sales obtained from the Land Registry that correspond to the parameters of the monitored sample. The Market Report works exclusively with data based on actually achieved prices, the calculation of which includes the price for parking spaces and a proportion of the exterior. To recalculate the exterior area, this methodology uses a specially developed algorithm that progressively reduces the exterior area while also taking into account its ratio to the interior area.
Another useful tool for a more accurate interpretation of the development of the rental market is the Rental Price Index by S&W + VŠE, an analytical instrument developed by Svoboda & Williams in cooperation with the Faculty of Informatics and Statistics of the University of Economics in Prague. The data used in this index are the actually achieved rents of apartments listed by Svoboda & Williams.