10. April 2018
Premium Residential Market: Facts & Myths
Jana Volavková, a Senior Research Analyst at Svoboda & Williams, gave a talk at the Perspectives of Housing panel at the Real Estate Market > Spring 2018 conference. In her presentation called Premium Residential Market: Facts & Myths, she stressed that even in the times of high real estate prices, premium properties remain in strong demand.
The data collected by Svoboda & Williams reveals that the increase of the average price of Prague apartments is a result of the skyrocketing prices of mid-range apartments which have, according to available information, risen by as much as 50% during the last three years. In the same period, the price growth has been much slower in the premium segment, reaching about 24%, according to Jana Volavková. Nevertheless, the average sales price of "secondhand" apartments situated in Prague 1 is currently getting close to CZK 150 000 per square meter, in Prague 2 and 6 it´s around CZK 105 000 per square meter. Only in Prague 4, 9 and 10 the average sales price is below CZK 90 000 per square meter. Apartment prices in new residential projects are approx. 30-50% higher. The presented data is based on an analysis of a Svoboda & Williams sample, which only involves realized, i.e. not advertised prices.
A significant increase can also be seen in the Prague rental housing market. According to the Svoboda & Williams Rental Index, which has been developed in cooperation with the Faculty of Informatics and Statistics at the University of Economics in Prague, the prices in this segment have increased by 19.2% since the beginning of 2015. This new analytic tool can record the change of the price level more accurately than mere monitoring of the development of the average rental price. Moreover, it processes only data concerning realized rental transactions.
The growth of rental prices is a result of the increasing demand for rental housing among Czechs, which is, as Jana Volavková emphasized, caused primarily by the economic rise of millennials. This generation tends to be less interested in property ownership and favors the flexibility of rentals. Another important factor influencing the rental market is the rapid growth of sales prices of Prague apartments and the tightening regulations on mortgage loans imposed by the Czech National Bank.