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Housing Shortage in Prague: What Does It Have to Do With Non-public Pre-sales?

1.8.2021

As we all know, property prices in Prague are rising and buying an apartment is becoming an increasingly difficult and complicated goal for the average Prague resident.

     It is also important to note that the increase in the interest rate has in practice not affected the interest of Czechs in buying a home, which in turn does not indicate a possible future decline in demand for real estate. According to analysts, the high demand is causing a continuous increase in prices per square meter. According to official data published by property developers such as Skanska Reality, Trigema or Central Group, property prices have increased by 10% compared to last year, i.e. the average price per square meter in Prague is currently around 118 thousand Czech crowns.

     But what caused the current situation on the real estate market? It is mainly due to the massive purchase of properties by investors in private pre-sales. In other words, some of the apartments in residential complexes that are currently under construction are usually already bought before the official start of sales. This means that the average buyer does not have the opportunity to choose the apartment they like, even if they have the financial funds to do so. The point is that the average professional investor is able to buy at least five or more apartments in Prague per year, while the average person makes a purchase every 10 years. According to the Prague real estate agency Lexxus, 25% of all available apartments are sold through private pre-sales.

     But how have private pre-sales and mass purchases of apartments in Prague affected the state of the real estate market in general? As mentioned earlier, the growing trend of demand has caused an increase in prices even for the most unpopular types of apartments  in Prague, such as five-room, four-room and one-room flats. For example, the price of an average one-room apartment in Prague is around 128 278 Czech crowns per square meter, while for a four-room apartment it is 116 315 Czech crowns per square meter. As usual, the most popular flats on the market among private investors are properties with 2+kt and 3+kt layouts.

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