Decline in transaction prices of flats in the second quarter is related to transactions rather than to a fall in prices

- According to Flat Zone's transaction price statistics, the average price of an apartment in the whole country fell below CZK 92,000 per square metre in the second quarter. In Prague, the level of transaction prices stabilized around 151 thousand.

- The slight overall decline in the average price reflected a partial correction in older brick apartments in the capital, but also a different composition of completed transactions.

- Meanwhile, demand has failed to align with the constrained supply, both in new residential projects across the regions and in older brick housing stock in Prague.”

- July data from first sales of new-buildings showed a slightly lower average transaction price in the country of around CZK 136,000 per sqm.

In the second quarter, the average price of flats in the Czech Republic fell by 2% quarter-on-quarter below the CZK 92,000 per square metre mark. This slowed the year-on-year growth rate to just under 10% from the almost 17% recorded in the first quarter.

The roughly 2% quarter-on-quarter decline is due to two main factors: 1) prices in Prague remaining unchanged on average after two quarters of rising by more than 5%; 2) price growth in the rest of the country moderating to less than 2% (compared to an average of 3% in the previous two quarters).

The unchanged average price in Prague, slightly above CZK 151 thousand per sqm, mainly reflects a 7% partial correction in older brick apartments, whose price has fallen to CZK 147 thousand per sqm (but after almost 10% jumps in the previous two quarters), and a drop in transactions in otherwise again 3% more expensive first sales of new buildings.

The volume of transactions executed remained stable quarter-on-quarter at around 15,000. However, the year-on-year growth rate slowed down significantly to around 4% after an average 32% growth in the previous five quarters.

Behind this stability is a decline in the number of first-time sales of new homes from developers to households, across regions. Conversely, in other segments - both new and older flats - the quarter-on-quarter increase in the number of transactions continued, particularly outside Prague. In the capital, however, deal volumes fell in all categories except older prefabs, where prices rose by almost 5%, further increasing the ratio to first-time and new-build prices to 74% from 67% in 2023.

Average house prices were 17.4% higher than the 2023 average in the second quarter, driven mainly by first-time sales across the country since the start of the year. However, their contribution eased in the second quarter due to fewer transactions in this segment. On the contrary, transactions with prefabricated flats gained more weight, while older brick buildings showed stronger growth in the regions, but their contribution weakened in Prague.

The average transaction price of first-time homes fell to 136,000 per square metre in July, equivalent to a 4.5% month-on-month decline after a 5% increase in June (or 4.7% quarter-on-quarter growth in Q2). This development was accompanied by a further slowdown in Prague transactions, where the average price stood at CZK 167 thousand, while other regions saw stronger transactions with an average price of around CZK 109 thousand per sqm.