A look back at 2023
At the start of 2023, the residential property market was significantly affected by the slowdown in demand seen in the previous period, which was caused by a downturn in the mortgage market due to high interest rates and tighter regulation by the Czech National Bank. However, the war in Ukraine marked a major turning point, bringing the residential market to a standstill for several months. People were primarily focused on addressing geopolitical and financial uncertainty.
The year 2022 and the start of 2023 were therefore characterised by a reduced willingness to make strategic decisions on the part of both clients and developers, who decided to postpone the implementation of certain projects. “The lack of access to home ownership, coupled with the influx of Ukrainian refugees, led to a significant increase in demand for rental accommodation. This resulted in a sharp rise in rents,” says Jana Panochová, senior consultant at LEXXUS NORTON.
Mozaika Holešovice, a successful residential rental project in Prague’s Holešovice district.
In the second half of 2023, opportunities opened up for cash buyers, who were able to choose from a growing supply and negotiate favourable terms. Demand began to rise; in December, we recorded an unusual year-on-year increase in demand of 60 per cent. This also marked a record for the number of enquiries received in December since 2010. “Institutional rental projects also contributed significantly to the high level of client interest,” explains Peter Višňovský, Chief Operating Officer and Partner at LEXXUS NORTON. In 2023, flats were on offer in dozens of rental developments across Prague, with most of them showing high occupancy rates or being fully let, despite prices being higher than is usual for individually let properties.
LEXXUS NORTON’s outlook for 2024
In 2024, we expect the residential market to continue its gradual recovery, a trend confirmed by the ongoing rise in demand during the first weeks of January. In parallel with less stringent regulation by the Czech National Bank, the stabilisation and decline in the prices of building materials – which have so far been at their peak – will continue. We also expect interest rates on project financing to fall, which may support the construction of new residential projects. Interest in rental accommodation will continue, and developers – who are already planning the construction of further rental projects – will capitalise on this.
Would you like to know more about what happened on the Prague residential market in 2023? Click here to view our Market Report, prepared by the consulting department at LEXXUS NORTON.
