The Czech real estate market enters 2026 defined by a tricky contradiction: banks are pumping record liquidity into the system at the same time that the pipeline for new projects has dried up to generational lows.
According to fresh data from the Czech Statistical Office, construction output technically rebounded in 2025, rising 9.3% year-on-year to flip the previous year’s decline. However, that growth is masking a deeper structural problem. The gains were driven largely by a 10.5% surge in civil engineering on the back of state-funded transport infrastructure, alongside an 11.5% rise in completed dwellings. Common wisdom suggests that downturns are a good time for state-led investment, especially if it’s in badly-needed infrastructure.
But looking forward, it appears that the private sector engine is stalling. Building authorities issued just 61,613 permits nationwide last year—the lowest figure recorded in over 25 years. Housing starts also slipped 2.2%, prompting Redstone’s Richard Morávek to characterize the current climate as “stabilization, not recovery.”
Unfortunately, this supply crunch is colliding with a massive resurgence in demand. Banks poured CZK 321 billion into new mortgages in 2025, a 41% jump that marks the second-strongest year in Czech history. When refinancing is included, the total market volume hit CZK 406 billion.
The driver is clear: the cost of money is falling. Average rates eased to 4.49% by December 2025, down from nearly 4.8% a year prior. With ČSOB projecting another 13% rise in volume for 2026, this liquidity is chasing a shrinking inventory, inevitably driving prices upward. In Prague, new-build transaction prices climbed 13% to CZK 175,200 per square meter in Q4, while hotspots like Holešovice are now trading above CZK 223,000 per meter.
A Strategic Freeze
Into this overheating market, Central Group owner Dušan Kunovský has thrown a wrench. In December, he announced a one-year freeze on all new project launches—roughly 1,000 units—citing construction and labour costs that he deems unsustainable.
Kunovský explicitly compared the move to his 700-unit pause in 2022, a decision the rest of the market eventually followed. While Prague Deputy Mayor Petr Hlaváček dismissed the move as a supplier negotiation tactic, the numbers suggest a calculated market bet. With 3,200 units already under construction and a city-wide cumulative deficit estimated at 100,000 apartments, Central Group appears willing to wait out the cost spike, confident that demand isn’t going anywhere.
Legislative Headwinds
The political response to this deadlock arrived on January 30, when the Chamber of Deputies passed a controversial Building Act amendment through its first reading. The bill aims to centralize authority and declare mass housing construction a matter of public interest, potentially opening the door to compulsory land purchase.
However, the path to implementation is fraught. ČKAIT president Robert Špalek has attacked the bill as a “de facto new law” serving large developers over ordinary builders, while heritage experts have petitioned Prime Minister Babiš, warning that the fast-tracked legislation threatens monument protection in historic zones.
With the new law not set to take effect until January 2027, the market is left to navigate the demand-supply disconnect on its own. Mortgage financing is plentiful and prices are running hot, yet the permit pipeline is thinner than at any point since the late 1990s. As thousands of 2021-era mortgages come up for refinancing at higher rates this year, 2026 will test whether the sector is in a genuine upcycle or simply being squeezed against a bureaucratic wall.
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