ZEN Residence is an exceptional residential project that combines modern design, comfort and unique panoramic views of Prague.
Number of new flats sold in Prague
In 2024, a total of 7,200 new flats were sold in Prague, representing a year-on-year increase of 80 per cent. The total volume of sales thus approached historic highs, with a higher number of flats sold recorded only in 2021 (7,450 units). That record was linked to the Covid pandemic, when investors allocated their funds to property in response to rising inflation.
The current high volume of sales is primarily the result of pent-up demand, which had been deferred in previous years due to unfavourable conditions in the mortgage market and heightened economic and geopolitical uncertainty. With the fall in interest rates and the stabilisation of the macroeconomic environment, this pent-up demand has manifested itself in increased market activity, leading to a significant recovery in new flat sales.
Supply of new flats in Prague
The number of flats on offer in the Prague market remains stable; in the fourth quarter of 2024, 5,700 new flats were available. In 2024, a larger number of flats from projects deferred from previous years came onto the market; the development of these projects had been suspended in previous years due to high construction costs and an unfavourable macroeconomic situation. Nevertheless, the overall supply did not increase significantly, as the flats were quickly absorbed by strong demand.
Capacity constraints in the housing market are primarily caused by lengthy and administratively burdensome planning permission processes, which hinder the dynamic expansion of supply. The situation has been further complicated by the unsuccessful digitisation of the building sector’s administrative procedures, which was originally intended to speed up and streamline approval processes but, due to implementation problems, has been postponed until the start of 2028.
In addition to regulatory barriers, the growing demand for rental accommodation, which absorbs part of developers’ output, is also contributing to the reduction in the availability of new housing. Given the persistent systemic constraints, it can be assumed that the insufficient supply of new flats will continue to be one of the key factors influencing price trends in the market.
Prices of new flats in Prague
Prices of new flats reached record levels at the end of the year. The average asking price rose by 7 per cent year-on-year to 163,000 CZK/m². The price increases were influenced by the launch of more expensive projects onto the market, rising construction costs and a reduction in marketing incentives. However, the main reason for the long-term rise in prices remains the slow approval process for new construction, which limits the supply of flats on the market and maintains constant upward pressure on prices.
Mortgage market
The significant increase in demand for new housing was also supported by developments in the mortgage market, where the volume of new loans rose by 83% year-on-year. A key factor was the lifting of mortgage lending regulations imposed by the CNB in previous years, but above all the fall in mortgage interest rates, which encouraged prospective buyers to purchase property.
Forecast for 2025
In the coming years, we expect prices of new flats to continue rising. The main reason remains limited supply, which, despite high demand, is not set to increase significantly. The process of granting planning permission for new developments remains lengthy and inefficient, whilst the planned digitalisation of the building regulations, which was intended to speed up approval processes, has been postponed until early 2028. For this reason, it cannot be expected that the pace of approving new projects will accelerate significantly, which will lead to a further widening of the imbalance between supply and demand.
On the demand side, interest in new housing is expected to remain consistently high, as mortgage interest rates have already reached a level that most buyers consider acceptable. Furthermore, the gradual reduction in rates may attract further prospective buyers who have been holding off on purchasing in previous years. This development is likely to maintain strong upward pressure on prices.
Given these factors, the availability of new housing in Prague is not set to improve significantly in the foreseeable future. In the absence of systemic changes to planning permission processes, flat prices can be expected to continue rising, not only due to strong demand but also because of the ongoing shortage of new builds.
