It seems that the COVID-19 crisis is not affecting the rise in real estate prices in Prague.
The COVID-19 crisis is not expected to lead to a decrease in property prices in the Czech Republic, according to statements made in early 2020 by members of the Association for the Development of the Property Market in Prague. However, they predicted a slowdown in sales and a decline in rental prices, but noted that the shortage of apartments on the market is expected to tip the scales and lead to an increase in real estate prices in Prague.
According to data from the development company Trigema, the number of apartments available for long-term rent in Prague rose to 12,371—an increase of 71.8% in the first quarter of 2020 compared to the same period the previous year. This was the highest increase in the last four years, resulting in an 86.1% rise in the number of available properties compared to the same period the previous year.
The group’s president, Zdenka Klapalová, stated that the increase in available apartments for long-term rental could lead to a drop in prices, but this decrease is expected to be short-lived. Given the acute housing shortage in Prague, she anticipates a temporary drop in demand this year. She also noted that property prices are unlikely to decline, though there is an expectation that the time required to close deals will increase—placing pressure on sellers to offer price discounts. In her opinion, demand will weaken because people will postpone property purchases due to a sense of economic uncertainty. Additionally, developers are not responding flexibly enough to market demand, and the supply of apartments is insufficient—contributing to rising prices.
Nonetheless, she believes that legislation is the key issue affecting apartment prices, especially the slow and complex approval processes currently in place in Prague. Therefore, the Association for the Development of the Property Market is drafting a new building code, which is expected to shorten and simplify construction-related bureaucracy.
This legislation, expected to come into effect in mid-2023, already faces significant opposition—some claim it will benefit developers and go against the public interest, while others argue it is unconstitutional.
In any case, analysts estimate that the construction sector will be among the first to recover from the COVID-19 crisis, mainly due to the fact that it is not heavily dependent on foreign trade.
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