Soaring Demand for New Apartments Surprises Developers

People are once again eager to buy properties. In Prague, the largest real estate market, developers sold 1600 new apartments in the first quarter—the largest number in the last three years. Demand is also growing in the regions. For example, in Brno, interest was more than double compared to the previous year. As a result, the decrease in apartment prices has stopped and will likely increase this year.

“The number of apartments sold surprised me. I expected it to be similar to the last quarter of last year, around 1300 apartments,” said Petr Michálek, Chairman of the Board of Skanska Residential. The company and Central Group and Trigema compile apartment market analyses. Their representatives also did not expect such high numbers.

From January to March, 2.5 times more apartments were sold in the capital than a year ago. The dramatic increase is distorted by very low sales last year, but this year’s figure is striking even when comparing the last ten years. Developers only experienced the same or better first quarter in 2015 and 2016, when the market fully woke up from the previous financial crisis, and in 2021, when extremely cheap mortgages drove it.

The developers estimate they will sell six thousand apartments this year, two thousand more than last year. This would mean an even stronger year than developers were used to before the pandemic.

The increase in sales, along with limited supply, will put pressure on property prices to rise. This is agreed upon not only by developers but also by real estate experts. “The time of expecting apartments to continue to become cheaper has ended,” believes Pavel Kliment, a consulting firm KPMG partner focused on the real estate and construction market.