The Czech Republic has secured the unenviable position of being the second least affordable European country for homeownership, as revealed by the latest Property Index by Deloitte. Prospective homeowners in the Czech Republic need an average of 13 gross annual salaries to acquire a 70-square-meter property, a figure that has held steady from the previous year. In Prague, one of the most expensive cities for homebuyers, the average requirement escalates to 14.3 gross annual salaries, trailing only Amsterdam and Bratislava.

Across the Czech Republic, residential property prices have surged by 12%, in line with the trend observed in 22 other countries. The average cost of housing per square meter has surged from €3,342 ($3,940) in 2021 to €3,753 ($4,420) this year. The abrupt decline in apartment sales in the Czech Republic’s residential market is attributed to the Czech National Bank’s tightening monetary policies, according to Miroslav Linhart, Head of Financial Advisory Services at Deloitte.

While homeownership remains expensive, the rental market paints a relatively different picture. Renting in the Czech Republic is comparatively affordable in relation to other European countries. Prague ranks 23rd out of 66 cities in terms of average monthly rental prices, averaging €14.4 ($17) per square meter.

Amidst soaring rental costs, demand for rental properties has surged, particularly in regional cities. This shift in demand has drawn the attention of investors and developers, prompting increased interest in constructing rental projects. Petra Hány, Director of Real Estate and Construction at Deloitte, affirms that rental housing is experiencing a flourishing period in various regional cities.

Deloitte’s Property Index identifies Belgium and Norway as the most affordable nations for homeownership within the EU, where residents require fewer than five gross annual salaries to purchase property. Denmark and Slovenia closely follow suit. On the contrary, Israelis paid the highest prices for new buildings last year, averaging €5,701 ($6,712) per square meter.

The Czech residential market is anticipated to remain challenging for aspiring homeowners. Nonetheless, the surge in demand for rental properties could provide a viable alternative to ownership, particularly for individuals not yet ready to commit to the financial demands of purchasing a home.

Article by Prague Forum