Property in Czechia is growing in value: market overview
Property in Czechia is breaking price records among European countries. Market research has shown that local property prices are among the highest in the region. To buy a 70-square-metre apartment, you need to spend 13 annual salaries.
Petr Hána, a Deloitte’s Czech office representative, noted that the local market has been experiencing consistently high property prices for quite some time. The probable reason for this feature could be a small sector with one major centre – Prague, which is much more developed than other cities.
Features of the Czech property market
It is worth noting that in the Czech Republic, the government has practically no control over the property market due to historical events. In 1989, the country passed the stage of market privatisation, which in turn helped to create a free market. However, another side to this peculiarity is that the private property sector is becoming less and less accessible. The creation of funds to meet social needs could improve the situation. So far, however, the authorities still need to address this issue.
As far as the rental sector is concerned, property is more affordable than in the purchase segment. But even renting in the country is the fourth most expensive in Europe. The monthly rent per square metre in Prague is more than 15 euros.
Market dynamics
According to CZSO data, the Czech market experienced a slowdown in price growth in the first quarter of 2023. At that time, purchase prices increased by only 1%, the lowest dynamics since 2013. By comparison, in the first quarter of 2022, price growth was more than 24%.
If we look at the sector’s development, considering inflation, prices have fallen almost everywhere in the country. On average, a square metre in the Czech Republic costs 3.8 thousand euros. At the beginning of 2023, housing sales slowed down, and the number of transactions in different regions of the country decreased by about 20-23%. As for the Prague market:
– the most expensive property is in the Prague 1 district of the capital – 6.8 thousand euros per square metre;
– in Prague 2, the price is 6.2 thousand euros per square metre;
– affordable housing in Prague 9, where a square metre costs 4.6 thousand euros;
– the cheapest property in the capital is in Prague, 10 – 4.5 thousand euros per square metre.
According to experts, the Czech economy is going through a difficult period. Nevertheless, studies conducted by the German economic institute Ifo and the Institute for Swiss Economic Policy show that the Czech property market will start to develop actively over the next decade.