The Prague residential market recorded a strong decline in sales and a slowdown in the construction of new flats in H2 2022. During the second half of the year, the construction of 1,670 flats was launched, which represents a 63% decrease y-o-y. Although the number of dwellings under construction fell slightly to 12,400, construction activity remains high compared to the five-year average. On the other hand, completion levels are strong with 4,020 dwellings being delivered between July and December 2022, showing, an increase of 112% on the previous year.

However, due to high interest rates, tighter mortgage lending conditions and the declining purchasing power of the population, sales fell even more sharply than in H1 2022. In the second half of the year, only 1,100 flats were sold, which is the lowest level during the last 10 years.

Sales falling third half-year in a row

Cooling demand is evident for the third consecutive half-year. With a peak in demand two years ago, the number of apartments sold in just the second half of the year exceeded 3,500 apartments. In the whole of 2022 however, only 3,000 flats were sold, representing the second weakest year on record since JLL began monitoring residential market statistics in 2012.

Prices of new apartments stay resilient

The average sales price for apartments on offer increased during H2 2022 to 128,800 CZK (€5,460) per sqm (excluding VAT), representing a slight increase on the previous period. Reduced sales activity of newly constructed apartments has thus not materialized in decreasing prices. On the contrary, there has been another price shift, where more affordable apartments are gradually disappearing from the open market and are being pushed out by more expensive apartments.

For newly commenced projects, the core of the market represented apartments in the price range from CZK 100,000 (€4,240) to CZK 119,999 (€5,080) per sqm (43%). However, the share of apartments in the price category from CZK 140,000 (€6,000) to CZK 159,999 (€6,800) per sqm has significantly increased from 3% registered in 2021 to the current level of 17 %. Further, apartments in the top segment with sales prices starting at CZK 160,000 per sqm have grown their share in annual comparison from 1% to 6%.

„Price decrease, which is happening on the secondary market, has not been recorded with newly built apartments yet. There are discount campaigns, guaranteed mortgage rates, special instalments calendars or vouchers for fit-out being offered to customers, but no actual price reduction, with a few minor exceptions, has taken place. The main reasons for this are the high construction cost and expensive financing. On the other hand, the prices are not rising so steeply as we used to see in 2021 when the annual growth was over 30%. For 2022, the average sale price increase by less than 5%. Cooling demand had rather a price correction effect, although price increase with newly commenced projects is still on the way“, said Blanka Vačkova, Head of Research at JLL.

Vysočany on top of construction activity

Praha 9 is traditionally one of the most active districts in terms of new apartment development and as of now, this is mainly due to massive construction activity in the cadastral district of Vysočany where more than 1,400 apartments in 8 residential projects are being built. More apartments are underway in Vysočany for this year.

„Good transport connection by metro, the location in the inner city and available land thanks to a large number of brownfields make Vysočany one of the largest housing construction sites in Prague. Compared to other districts, it is also one of the most affordable, “ added Blanka Vačkova, Head of Research at JLL.

Of the total volume of 12,400 flats, a full quarter are currently under construction in Prague 9. There is also strong construction activity in Prague 5 with 2,800 flats under construction and in Prague 4 with 2,400 flats. Although there are now approximately 2,000 fewer apartments under construction compared to the first half of 2022, construction activity in Prague remains high. Compared to the same period before Covid, there are now approximately 3,700 more apartments under construction

„Due to overall uncertainty in the market, there is a tendency to postpone the commencement of residential projects. This can be seen already in the figures from the second half of 2022 when the level of commenced apartments went down significantly as well as apartments put on sale were lower. We expect the number of projects in construction to decrease in the coming period unless the situation on the mortgage market improves “, concluded Blanka Vačkova, Head of Research at JLL.

More available apartments

The number of apartments on offer went up and at the end of 2022, there were 4,820 apartments available, which shows an improvement of 51% y-o-y. 2+kk (1-bedroom) apartments are the most popular with buyers, in H2 2022 their share of total sales represented 43%. 3+kk (2-bedroom) apartments were purchased by 20% of buyers. The second most popular category is 1+kk apartments (studios), however, their share of sales has bi-annually decreased from 27% to 22%. We expect that due to decreasing demand and slowed down mortgage market the number of available apartments will further increase in the future.