In 2020, the demand for new apartments in Prague exceeds the supply.

The demand for new apartments in Prague is expected to increase by 3.4% in 2020 compared to 2019, but the number of available properties will grow by only 1.4% – according to a survey conducted among 40 local developers by CEEC Research. Next year (2021), demand for new apartments is expected to rise by 3.1% compared to 2020, but supply will increase by only 0.8%, leading developers to anticipate growing interest in the renovation of old apartments.

Peter Beneš, the director of Geosan Development, told the Czech News Agency that the slow pace of obtaining building permits means only one thing – developers have been unable to respond flexibly to the current high demand in the real estate market. The Czech government has pledged to accelerate and simplify the permitting process through new construction legislation, but it is set to take effect only next year, and it remains to be seen how successful its implementation will be.

However, the proposed legislation has not been free of criticism. A common complaint is that the legislation favors developers at the expense of the public interest. Some experts have even called the legislation unconstitutional, mainly due to the unusually fast pace at which it was passed. Developers, for their part, say that building in the city center is not attractive to them, so they expect some of their most promising projects in the coming years to be located within commuting distance of Prague. They also believe that apartments up to 60 square meters and properties purchased for rental purposes will be especially in demand. In contrast, apartments over 100 square meters in the city center will, according to them, be less sought after.

Nearly three-quarters of the developers interviewed defined the situation as problematic – specifically the declining availability of homes for purchase. This decline is attributed to high apartment prices, rising costs of land, construction workers and materials, heavy tax burdens, and unfavorable mortgage conditions. Tomáš Kadeřábek, director of the Association of Developers, said that the overall situation regarding the availability of homes for purchase had become so severe that it prompted the government to take legislative action.

According to data from construction and infrastructure companies Trigema, Skanska Reality, and Central Group, prices of new apartments in Prague rose by 11.5% at the end of October to 106,713 Czech crowns per square meter. According to the Czech News Agency, the market shift occurred in mid-2015, and in the following two years prices rose by 2.3%. Since then, prices have climbed by 92%.

Want to stay up to date with everything happening in the Prague real estate market and receive interesting offers? Subscribe to our newsletter here.