Economy: Strong Housing Demand, Inflation Around 4%
The volume of housing loans issued in the first five months of the year increased by 25% Y/Y, reaching the highest level since the record year of 2022, supported by slightly lower mortgage rates at the beginning of the year. This continued to support residential price growth, with prices increasing by 14% Y/Y in Q1, while Bratislava recorded the strongest growth at 19.5%, according to the Slovak Statistical Office. However, average mortgage rates rose by around 30 bps compared with the beginning of the year, reaching 3.7% in May, driven by higher ECB rates and increased risk premiums on Slovak government bonds.
Inflation reached 3.5% in June and has broadly stabilized slightly below 4%, with a similar level expected for the rest of the year. Despite elevated inflation and several fiscal consolidation measures, household consumption remained resilient, supporting GDP growth of 0.9% in Q1. Economic activity is expected to accelerate to 1.9% in 2027, driven mainly by an expected recovery in global trade and stronger foreign demand.
Supply And Demand: Robust Sales, Prices Increasing
In Q2, residential demand strengthened, with 766 units sold (704 public and rest private sales), representing a 21% QoQ increase, while remaining slightly below last year's level with a decrease of 4% YoY. The quarterly uplift was also supported by seasonality, as Q2 has historically been the strongest period for residential sales. Looking ahead, sales activity is expected to remain broadly in line with last year, ranging between 550 and 700 units per quarter.
Stronger demand was reflected in price growth, as the average transaction price increased to €5,514/sqm, up 8% YoY, narrowing the gap with the average asking price of €5,620/sqm, which grew by 3% YoY. This indicates that transaction prices have increased around four times faster than asking prices over the past year.
On the supply side, available units increased to 3,890. At the same time, the average size of both sold and available units declined, with sold units decreasing on average by more than 5 sqm and available units by around 1 sqm. One-bedroom apartments (2+kk) remained the dominant category, accounting for 48% of sales in Q2, followed by two-bedroom apartments (3+kk) with a 22% share, supported by smaller average unit sizes that helped maintain affordability.
Prague & Bratislava: Diverging Sales Dynamics, Growing Supply
Q2 showed opposite sales dynamics. Bratislava recorded a strong quarterly rebound, while Prague saw a further decline in sales activity. However, Prague's weaker performance should be viewed against last year's exceptionally strong market, which created a high comparison base, while continued price growth has also started to weigh on affordability.
At the same time, Prague's available supply surpassed 7,200 units, the highest level in more than a decade. This reflects the launch of larger development phases and confirms the market's higher quarter-on-quarter volatility. Bratislava, by contrast, continued to show a steadier pattern, supported by a more gradual release of smaller phased projects and a higher share of end-user demand.
Both markets remain active. Prague is expected to remain more volatile across individual quarters, while Bratislava should continue to show a more stable sales trajectory over the coming period.
