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Prague land prices up 15%

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The prices of land in Prague are almost 15% higher than a year ago, according the updated draft price map of building land for 2009 made available to Aktuálně.cz.

The most expensive land plots are traditionally located in downtown Prague, where the top prices hover around CZK 50,000 per square metre. There has been no price increase, however, in the area between Wenceslas Square, Pařížská street and Náměstí republiky.

The situation is different for locations farther from the city centre. While last year the average price of land just outside the city core (Vinohrady, Karlín, Smíchov) reached CZK 5,344/sq m, this year it is already CZK 6,132.

In locations on Prague’s periphery, such as Malešice, Vysočany, Bohnice and Modřany, average land prices have now reached CZK 4,018/sq m. Last year it was only CZK 3,238.

This year, lots for the construction of detached houses in Prague are going for anywhere between CZK 3,000 and CZK 12,000/sq m. The most expensive lots are traditionally found in Hanspaulka, Ořechovka, Šárka, Břevnov, Barrandov, Bráník and Trója.

But the places that have experienced the biggest price growth are those experiencing a building boom. This includes the areas between Pitkovice and Koloděje on the eastern side of Prague and between Lipence and Zličín to the west.

Apartment prices to fall, land price growth to slow

While land prices in Prague continue growing, prices of flats are beginning to stagnate, and in some cases they even drop. According to experts, this trend will continue into next year.

There are now very few high-quality building lots left in Prague, so their prices will continue to increase even at a time when real estate companies have trouble selling apartments.

Despite this lack of suitable building locations, we can expect the growth of land prices to slow down in the long run. This is, after all, what the land price map shows.

While in the last few years, year-on-year price increases hovered around 20%, this year it is just 15%. Real estate experts predict that the average price growth could slow to as little as 5-10% in 2009.

Waiting for approval

The price map quotes prices of land plots in a given location that have been sold over the past year. The price of other land plots is derived from the price of these transaction according to a number of criteria. But since this method cannot be applied to all cases, some land plots are left without a price tag.

Prague City Hall has for now only a working version of the document. “This is so far just a draft of the price map, and it is currently undergoing revisions. It then needs to be approved by the city assembly. So it’s possible that some prices will be adjusted,” councillor Pavel Klega told Aktuálně.cz.

If the assembly approves the 2009 property price map by the end of the year, the prices will be incorporated into a municipal regulation that could come into effect starting 1 January 2009.

The property price maps are used as the basis for calculating the tax on property transfers. If the market value of the property in question is lower than the price quoted in the map, the taxation is based on the map price. In the opposite case, the tax is calculated based on the transaction price.

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