Clients’ demand for real estate, which began to increase in early summer, continues to rise. The reasons for this uptick are the signals sent out by central bankers as well as stagnant property prices. But the growing cost of rents in the wider center of Prague is becoming more stable. These are the key trends in the Prague residential market in the first half of the year according to the latest analysis by the Svoboda & Williams real estate agency.
The signals sent out by central bankers in recent months acted like a wake-up call for the real estate market. “The mortgage market in the Czech Republic had a half-yearly growth of 42.6 percent. Svoboda & Williams also recorded clients’ increased interest in financing the purchase of real estate with loans, 10% more than half a year ago,“ says Prokop Svoboda, owner of Svoboda & Williams. His words are backed up by statistics: demand in the half-year comparison increased by 26%, with 37% of clients financing their property purchase with a mortgage.
The prices of premium properties are stagnating. “They are currently at the same level as at the beginning of the year,” says Svoboda & Williams’ analyst Kryštof Kušiak. This year, clients of Svoboda & Williams paid an average of CZK 152,220 per sq. m. for new builds (down by 2.1% compared to the previous half-year) and CZK 140,804 per sq. m. for resale properties (half-year growth of 2.3%). As expected, the prices for smaller studio and one-bedroom units, which were in greater demand among buyers, remained stable.
Compared to the previous period (October 2022 to March 2023), rents in Prague in the sample monitored by Svoboda & Williams increased by 6.9% to an average of CZK 40,542. “While in the very city center rent values are still experiencing a correction, in some segments we’re witnessing higher rents for all layouts in the wider center, sometimes in the double digits,” adds Kušiak. Rents for two-bedroom units in the city center decreased by 12.5%, while rents for the same layout in the wider center increased by 10.9%. “We’re seeing a decline in interest in luxury apartments in the center of Prague, which is mostly the result of the departure of expats. The greatest demand now is for affordable rental housing or for exceptional projects such as Fragment in Karlín that have an added value. Incidentally, we managed to find tenants for all 140 apartments with above-market prices in just a short time,” explains David Šimeček, head of residential rentals.
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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 into account the ratio of the interior to the exterior.
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 semi-annual basis.
