After years of growth, the real estate market in the Czech capital has seen a slow but steady decline, with decreasing prices and many more new listings having turned Prague property into a buyer’s market. One factor behind the change is waning interest from foreigners to invest into real estate in the Czech capital. However, some parts of Prague have become more attractive for Czechs and foreigners alike, while others remain popular primarily with foreign clients.
According to the 2013 year’s population census, 10 percent of Prague’s population is made up of foreigners. The majority of them are short-term labourers from Ukraine and Slovakia who are unlikely to buy real estate. But members of other expat communities – Russian, Vietnamese, or from other EU countries and the US – were important players on the Prague real estate market in the last 5-10 years.
Most of them looked to buy a flat in Prague even before the property prices crash of 2008. Apartments across the country now cost 17 percent less on average than five years ago although in Prague, the drop was much less dramatic.
After a slight increase in 2013, the sales of both new and second-hand apartments is stagnating. At the same time, the supply rises, making Prague real estate a buyers’ market.
Compared to 2005, the average price of second-hand flats in Prague has grown by 30 percent.
One of the factors behind this development is the flight of foreign investors. In the rich years leading up to the crash of 2008, foreign investment groups would buy dozens of new apartments at a time, and acquire attractive second-hand flats in prime locations. But this boom is gone, and not likely to come back.
At Home Network Prague is especially focusing on foreign investors and buyers. The interest of foreign buyers is much lower than seven years ago when we started in Prague. Even owners who now own property are more willing to sell and focus on different markets. With most investors gone, now we work mostly for Czechs. Today, we see that instead of investment groups from the EU it’s mostly individuals who buy places in Prague 1, 2 and 3, Russian clients in Prague 5 and Prague 13.
Prague 6, located north of the historic Prague Castle, easily accessible by metro and with the city’s largest park, Stromovka, remains one of the most popular areas to buy property, with Czechs and foreigners alike. Prague 6 is the safest area to invest in. In all other areas, prices go down and will go down in the future. However, Prague has seen the lowest price decrease, compared to the rest of the Czech Republic.
The historic centre – Prague 1 and Prague 2, along with Vinohrady, a pleasant residential area to the east of the centre, are also in high demand, and experts don’t expect any sharp price drops there, either.
In Prague, people are still interested in Prague 1, some parts of Prague 2 and Prague 3, as well as Prague 6. These are the areas most frequently explored at our foreign-language websites, most often in Russian, followed by English and German. But we also know that for example, parts of Prague 5 around the Anděl shopping district are popular with French clients which has to do with the fact that a French lyceum is located there.”
Among the upcoming parts of Prague is Holešovice in Prague 7, with many large, spacious apartments as well as new construction activity. Another attractive area is Vršovice, in Prague 10, which has the air of Vinohrady but worse transport connections which makes it more affordable.