The market for new apartments in Brno slowed down last year, but the price per square meter increased

Brno – The market for new housing in Brno significantly slowed down last year, but the average price per square meter of new housing continued to rise. In year-on-year comparisons, it increased by 17 percent to 117,000 crowns per square meter. Last year, 758 apartments in new buildings were sold in Brno, of which 404 were in the first quarter. A year earlier, there were 1,192 apartments sold for the entire year. This is according to a market analysis of new housing published by František Šudřich. He has been preparing the market analysis regularly since 2015.

After a busy first quarter, interest rapidly cooled down. In the second quarter, 158 apartments found buyers, in the third 89, and in the fourth 107 new apartments. "The noticeable decline in realized sales was mainly caused by three reasons: the uncertainty caused by the war in Ukraine, the rise in base interest rates under pressure from increasing inflation, and mortgage market regulations introduced by the Czech National Bank in April of last year. For many interested parties, investing in real estate became inaccessible, risky, or financially unappealing," stated Šudřich.

Low sales are certainly not due to insufficient supply of new apartments, as was the case a few years ago. Currently, there are 1,398 available new apartments on the market in Brno across 56 projects. The prices of new apartments stopped rising around the middle of last year. Although the average price per square meter of sold apartments was 117,000 crowns for the whole year, asking prices now average around 129,000 crowns.

The average price per square meter varies depending on the overall layout of the apartment. In a so-called studio apartment, meaning a 1+kk layout, the current price is 135,500 crowns per square meter, so a one-room apartment of 35 square meters currently costs about 4.8 million crowns. In contrast, an apartment with a layout of 4+kk or more has an average price of 122,000 crowns per square meter and, at an area of 125 square meters, it averages about 15.2 million crowns.

According to experts, a price reduction for new apartments cannot be expected in the coming months. Among other reasons, this is due to the fact that prices of building materials and labor rose last year, and developers cannot afford to lower prices. Rather, they are slowing their construction activity. "We have postponed the start of new project implementations. We will focus on selling the apartments we currently have on offer. We plan to expand it only minimally," said Jiří Heinl.

A price decrease can, on the other hand, be expected for older apartments. "People who bought apartments a few years ago will make a profit even if they sell at lower prices. They bought apartments at what today are very favorable prices. However, this does not apply to developers. They are building at current prices, which, like energy, have seen significant increases over the past year. Thus, for new apartments, the proverbial cushion for price reductions is missing," said Šudřich.