The Brno residential real estate market has had a hot summer. Q3 has brought further growth and record sales. The episode of economic uncertainty is ending, reports Trikaya in its Q3 2024 analysis of the residential market in Brno.
The demand for new apartments has returned with full force since the beginning of this year. "However, we are probably still far from the price ceiling. The notorious Czech problem, i.e. construction activity stifled by bureaucracy, will probably continue to push prices up," says Dalibor Lamka, Executive Director and CoB at Trikaya.
As always, the holiday months slowed down the sales activity a bit, and then September caught up with the quarterly dynamics with a steeply growing buyer interest. From July to September this year, developers in Brno sold 275 apartments in new buildings. This is the most ever in any third quarter since 2013, since which market analyses have been regularly issued. In the past three years, it was the third most successful quarter and a year-on-year increase of 120 per cent.
In Q3 a square meter in Brno was offered for an average of CZK 131,700 (€5,210). The average price of an apartment in Brno rose to CZK 7.7 million (€305,000). The strong demand is not dampened by mortgage prices, which have fallen significantly compared to last year, but with the current setting of the central bank's base rate, according to experts, there is still room for a drop in commercial rates.
Buyers were mainly interested in small apartments with an area of around 34 sqm. Nová Zbrojovka became the most sought-after development project, at least in terms of sales in the third quarter of this year. The Diorit Residence and the Žižka Residence followed at a distance. In recent years, variants of cooperative housing have also begun to appear in the offer of new buildings in Brno.
According to economists, price growth will accelerate "While in the first quarter of this year, apartments on the Czech real estate market rose in price by 'only' 1.1% quarter-on-quarter, in the second by 2.9% and in the third by 3.7%. These values are incomparable not only with the previous year when there was stagnation or slight price reductions, but they also exceed the dynamics from the pre-pandemic period, when there was public talk of a real estate fever," comments Vít Hradil, Chief Economist at Cyrrus.
The period of domestically high interest rates and economic uncertainty that began in the first half of 2022 caused a postponement of purchasing decisions among a large proportion of households that are now returning to the market.
"A new buying generation is joining them, and this increased demand is coming up against an extremely limited supply after years of subdued construction activity. At the end of this year, we expect a further acceleration of the quarter-on-quarter price dynamics, and for the entire year 2024, we expect an average price increase of around five per cent. In our opinion, the overheated real estate market will remain even in 2025, when apartment prices should increase by another seven per cent," concludes Hradil.
