A further increase in demand for new build and resale properties, and an even more significant fall in overheated rental prices—these are the key trends in the Prague residential market in the first half of the year. All this from the latest analysis by the Svoboda & Williams real estate agency.
"The majority of investors who have been waiting for a significant drop in prices have found that this is unlikely to happen in the premium real estate segment. It may, however, occur for individual resale properties in situations when an owner is forced to sell at a discount due to personal reasons. Investors with financial savings in particular are therefore no longer playing the waiting game," writes Prokop Svoboda, owner of the Svoboda & Williams real estate agency. His words are also confirmed by the figures: demand has now gone up by 21.4% and up to 72% of clients purchase properties using their own resources.
The sales prices of premium properties in the first half of the year decreased slightly, 2.5 % lower compared to the second half of 2022. This year, clients of Svoboda & Williams paid an average of CZK 155,793 per sq. m. for a new build and CZK 137,505 per sq. m. for a resale property. But the driving force behind the real estate market is quality. "The oversized opulent villas of the 1990s with astounding built-up areas yet badly designed and poorly built are the unsellable real estate trash of today. Buyers are now interested in modestly sized properties that boast exceptional materials, energy ratings, and environmentally friendly facilities," adds Svoboda.
The post-covid boom in rental prices has definitely peaked. Compared the the second half of last year, rents in Prague declined by 3.1% to an average of CZK 38,712. "The biggest drop in rents was for properies in the very center of Prague," states Kryštof Kušiak, analyst at Svoboda & Williams. According to Kušiak's analysis, rents for smaller studio and one-bedroom apartments were 11.9% cheaper, and three-bedroom and larger units were down by 13.1%. Interest in more exclusive rental properties is also cooling. "It now take significantly longer than last year to find a tenant for a premium family house or large apartment,” confirms David Šimeček, head of residential rentals. "We saw fewer inquiries from expats, who were previously the typical clients for this rental segment," says Šimeček.
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How the Svoboda & Williams Market Report Is Created
The analyses in the Market Report are based on sales and rental transaction data generated by the activities of the Svoboda & Williams real estate agency. These figures are supplemented by data on property sales obtained from the Cadastre of Real Estate with similar parameters to the monitored sample. The Market Report works exclusively with data based on achieved prices, additionally taking into account the price of parking and the proportion of the exterior. This methodology uses a specially developed algorithm to recalculate the exterior area that progressively reduces this area and takes in to account the ratio of the interior to the exterior. We publish our Market Report four times a year. It processes data from the two most recent quarters and compares real estate market movements over two consecutive half-year periods.
Another useful tool for a more accurate interpretation of the rental market is the Rental Price Index by S&W + VŠE, an analytical tool developed by Svoboda & Williams in cooperation with the Faculty of Informatics of the University of Economics in Prague. The source of the data for this index are the actually achieved rents for apartments offered by Svoboda & Williams, and it compares the development of the rental market on a year-on-year basis.
