NEWS

Prague Flat Price Trends: From Rapid Growth to Anticipated Stabilisation and the Outlook to 2030

Prague's residential property market has developed exceptionally dynamically over the past five years. Following unprecedented price growth, culminating in mid-2022 when average prices per square metre approached the CZK 150,000 mark (and significantly higher for new builds), a noticeable cooling and correction occurred, driven by rising interest rates and economic uncertainty. 2023 brought stabilisation and a slight decline, particularly for older properties. However, the market has shown signs of revival since late 2023 and throughout 2024. Current data from the turn of 2024/2025 indicate an average flat price in Prague hovering around CZK 140,000 - 142,000 per m², while asking prices for new flats average between CZK 156,000 - 163,000 per m².

Older Flats vs. New Builds: Divergent Dynamics
It is important to distinguish between the market for new and older flats. Whilst the prices of new builds remained relatively stable even during the market cooling, supported by high construction costs and limited supply, the market for older flats experienced a more pronounced price correction in 2023. For older properties, their technical condition, the need for renovation, and energy efficiency play a crucial role. With increasing pressure to reduce emissions (ESG), energy performance is becoming an ever more significant factor influencing the price and attractiveness of older flats, as future costs for necessary upgrades can be substantial.

Regional Disparities Persist
Significant price differences endure between various city districts. Traditionally, Prague 1 remains the most expensive, with average prices exceeding CZK 200,000 per m² (according to the Deloitte Develop Index, reaching CZK 256,200 per m² for new flats in Q2 2024), followed by Prague 2 with prices around CZK 170,000 - 180,000 per m². Prague 7, 3, and 6 also maintain high price levels. Conversely, more affordable housing can be found in peripheral areas such as Prague 9 (around CZK 135,000 per m²) or Prague 4 (around CZK 136,000 per m²). Data from 2024 show interesting year-on-year increases, for instance, in Prague 10 (prefabricated panel flats +25%) or Prague 7 (brick flats +24%), signalling a renewed interest outside the centre.

“Following a period of rapid growth and subsequent correction, we are now observing market stabilisation, supported by a slight decrease in interest rates and continued strong, albeit more selective, demand. The key factor remains the limited supply, particularly concerning new projects,” says Filip Veselý of MORITZ & BAKER.

Key Factors Influencing the Market
Future price developments will depend on the interplay of several key factors. Among the most important are:

• Mortgage Interest Rates: Their level directly affects the affordability of financing for buyers. An anticipated gradual decline in rates could further stimulate demand.
• Economic Situation: GDP growth, unemployment rates, and inflation influence the purchasing power of the population and their willingness to invest in property.
• New Construction: The pace of permitting and completion of new projects in Prague has been insufficient. Slow construction amidst sustained demand puts upward pressure on prices. The estimated shortfall is in the tens of thousands of flats.
• Regulation: Changes in building legislation (e.g., the new Building Act) and increasing requirements for energy performance (ESG, EU directive on zero-emission buildings from 2030) may affect both the speed of construction and developer costs, thereby influencing final flat prices.
• Demographics: Prague continues to attract new residents, maintaining high demand for housing.

Outlook to 2030: Expectations of Moderate Growth
Predicting prices five years ahead is challenging; however, most experts concur that the upward trend will continue, albeit at a more moderate pace than in 2021-2022. Estimates range in the higher single digits annually (approximately 5-10%). This growth will primarily be driven by the persistent excess of demand over supply and gradually improving financing accessibility. Nevertheless, housing affordability will remain a fundamental challenge for Prague, particularly for young families and individuals on average incomes.

“Although we do not anticipate a return to the double-digit price growth seen in previous years, the ongoing shortage of new flats, combined with the expected gradual decline in interest rates, will likely maintain moderate upward pressure on prices in the coming years. Housing affordability will remain a key challenge for a large segment of the demand,” adds Filip Veselý of MORITZ & BAKER regarding the outlook.

Conclusion
Prague's flat market is currently stabilising following a period of volatility. For potential buyers, this necessitates careful planning and monitoring of market conditions, especially interest rate trends and prices in specific locations. Despite the high prices, investing in Prague property is still considered relatively safe, albeit with expectations of more gradual appreciation than in the recent past. A crucial factor will also be the market's ability to respond to the growing demands for sustainability and energy efficiency in housing.