The stagnation of the real estate market last year was particularly evident in property sales, not only for new builds but also for older apartments. The Czech Banking Association (ČBA) and Dataligence report a decline of up to 50% in real estate market activity and an average drop in property prices of 4%. According to their analysis, the market "freeze" led to the lowest number of sales in the last decade: a decline of up to 51% for older apartments, 49% for family houses, and 57% for new apartments, with prices falling more slowly.

After reaching maximum prices in most of the Czech Republic, there was a slight decline in the second half of 2022, averaging 4.3% for older apartments. In Prague, it was approximately 1%. In contrast, the average price of new properties sold increased by up to 11% (around CZK 120,000/m²), despite various discount offers and marketing campaigns. In Prague, the average price per square meter rose to CZK 151,643. Within the EU, after Hungary and Estonia, one of the fastest growths in real estate prices was recorded in Czechia.

The market freeze was caused not only by high real estate prices, but also by high mortgage rates, which led to the lowest volume of newly granted mortgages (excluding refinancing) since January 2014. In January, the volume of new mortgages reached CZK 5.4 billion. The ČBA article mentions an increase in repayments for a million-crown mortgage of approximately CZK 2,000 per month. For a three-million-crown mortgage, the average monthly repayment increased by approximately CZK 6,000.

The interest rate on newly granted mortgages fell in December for the first time in two years, from 5.98% to 5.93%. The current situation is expected to continue in the first half of this year, after which the trend could become significantly more positive. Mortgage rates could approach the optimal 3% during 2024, said RE/MAX CEO Jan Hrubý in an article in E15.

The current situation shows a reality that we may have to come to terms with in the future: home ownership will not be achievable for everyone. The gap is widening between people who can afford to buy property and those who will have to rely on rental housing. Czechia is thus gradually following the trend in Western countries, where renting is a common form of housing. A similar development can be seen in Slovakia, Hungary, Bulgaria, and Romania.

If you are looking for a new place to live, RealLocate can offer you not only rental housing in BTR projects, with which we mainly cooperate, but also properties for sale. You can find all our projects at www.reallocate.cz.

Source: Czech Banking Association, Rental Housing Association, E15