Construction activity in Prague has accelerated, yet prices continue to rise

The Institute of Planning and Development has published an analysis of construction activity and flat sale prices in Prague. It shows that the capital is seeing the highest level of construction in the past decade. The Institute has carried out this research annually since 2009, based on its own monitoring of the construction market using publicly available information. The analysis includes projects under construction or completed this year that contain at least ten flats. According to the Institute’s analysis, a total of 137 development projects were under construction or had been completed in Prague by September this year, creating 14,450 flats. Yet flat prices continue to rise, and most experts agree that they are unlikely to fall any time soon. What is causing this? We asked David Novotný, owner of the real estate company Bohemian Estates.

“Despite the accelerating pace of construction in Prague, there are still too few available flats and too few are being built. Given the length, complexity and frequent lack of transparency in building-permit approval processes, I do not expect this to change in the coming years. Demand is paradoxically also fuelled by the current pandemic situation, which is generating economic shocks and uncertainty about the future. In such circumstances, property has traditionally been one of the proven ways to invest money safely. What is more, after making the investment, you are left with something tangible, something that does not merely have speculative value. This is why wealthier buyers are responding to the current crisis by investing in property. Naturally, this keeps demand high,” explains David Novotný.

Moreover, during both the spring and autumn waves of the pandemic, the home became almost the sole place from which we lived our lives. We work, relax and spend time with loved ones at home, so our expectations of it and the needs associated with it are increasing. Naturally, many people began to address the quality of their home life, focusing on unsuitable arrangements or even their housing as a whole.

“When coronavirus infections first began spreading on a large scale in March, it caused uncertainty and speculation about property prices, even among professionals. Some predicted that prices would fall. It is now clear that property prices merely stagnated briefly and nothing dramatic happened. And now, clients who believed prices would fall and had held back until now are starting to return to the market. It remains true that when a buyer finds their dream property, price is often a secondary consideration. They are well aware that, in the current market situation, they might not come across a similarly suitable opportunity again for several years,” explains David Novotný.