Price Determinants of Flats Purchased for the First Time in Prague

Being able to correctly estimate the true intrinsic value of a flat is important for various economic agents. This paper is concerned with the price determinants of first-time- purchased flats in Prague. It is mostly about the hedonic pricing model and its applications using data from Vivus which is one of the larger flat developers operating in Prague. Ordinary least squares was the estimation method of choice in this study. The main results are as follows. The residual analysis showed no extremely overvalued or undervalued flats based on our chosen models. Moreover, the estimated increase in prices of average sized flats in Uhříněves was 36.76% from 2017 to 2019. This is a much larger magnitude if compared with the period of the financial crisis where an average sized flat in Na Vyhlídce increased in its price by 12.83% from 2007 to 2009. It is interesting to see that even during a recession, the prices of Prague flats were raising