Reviving Housing Market: Decline in Prices Comes to an End

The real estate market experienced a resurgence last year, following a slump in the previous year. New construction sales in the last quarter nearly doubled on a year-on-year basis, while sales of older apartments increased by 49 percent and an impressive 55 percent in Prague. Sales of family homes also saw a significant increase of 45 percent.

This represents a significant revival after a sharp drop in the second half of 2022, according to the Czech Banking Association and Datainteligence. The market activity in the last quarter of last year grew at a double-digit pace compared to the same period in the previous year.

“High year-on-year growth numbers should be viewed as growth from a completely frozen market where almost nothing was traded for a year,” said Milan Roček of Datainteligence. He added that we are now comparing ourselves with quarters where the fewest apartments were sold in the last twenty years.

Interestingly, prices of older apartments decreased by 4.4 percent year-on-year in the last quarter of the previous year, with the average cost per square meter at 60,000 crowns. The decline was more noticeable in Prague, which fell by roughly 6.8 percent. On a nationwide level, the prices of new constructions fell by only 0.1 percent in 2023.

The Czech Banking Association expects stagnation or a slight demand revival and a slight price increase shortly. The gap between household incomes and property prices slightly decreased last year. Despite this, a persistent imbalance exists between property prices and household incomes.

“From this perspective, last year brought a slight correction, but these scissors remain significantly open. The Czech Republic continues to rank among the top in international comparisons of housing affordability,” added Jakub Seidler, Chief Economist of the Czech Banking Association. Despite a slight cheapening last year, from a long-term perspective, the Czech Republic ranks among the countries with the highest price growth dynamics in the European Union.