Prague’s Older Apartment Prices Decline, New Builds Hold Steady, Reports Knight Frank

According to Knight Frank, the price of older apartments in Prague has decreased by an average of 2.2 percent to 8.5 million Czech korun in the last six months. However, the supply of these apartments on the market has reduced by 14 percent. In contrast, the prices of new builds remained stable, with the average offered price for an apartment being 9.7 million Czech korun.

Premium residential properties experienced a 1.9 percent price increase, reaching 202,430 Czech korun per square meter. Rental prices have followed the demand driven by the unavailability of affordable housing, as stated by the real estate advisory company Knight Frank.

Kateřina Poláková, Head of Residential Properties at Knight Frank, suggests that the period of stagnation and caution has ended with spring. She notes a shift in buyers’ demands, with people emphasizing housing quality and having higher expectations regarding its standards and additional services. Poláková believes there is a balance between price and property quality. This contrasts sharply with the pandemic years when low mortgage rates led to expensive and rapid sales of almost everything.

After a significant increase in rents last year, with some seeing growth of several tens of percentages, the expansion rate has slowed, according to the advisory firm. Price differences in rent are influenced by the condition of units and the availability of vacancies in a particular location. For instance, Knight Frank’s analysis shows that average rents in Prague 8 increased by 11 percent in the last six months, while they decreased by 5.3 percent in Prague 3.

The director of Business Development at Czech investment company Passerinvest, Eduard Forejt, suggests that the pressure caused by new residential construction could further reduce rental prices in older apartments. This could be due to the financial flexibility of individuals. When financially secure individuals move from the secondary market to new builds, they leave behind cheaper vacant apartments in the rental market. Similarly, moving from one older apartment to another could have a similar effect.

Forejt adds that not every elderly person necessarily moves into new builds; they may also opt to downsize to an older studio apartment instead of keeping a larger apartment due to the absence of children or grandchildren.