Rental Property Demand Surges: Czech Republic Faces Soaring Rents and Housing Shortages

Prague, Czech Republic – August 7, 2023

As the quest for homeownership becomes increasingly challenging, the rental market in the Czech Republic is experiencing a significant surge in demand. Real estate data indicates a staggering 28 applicants for every single rental advertisement, driving rents to unprecedented heights, especially in cities with prominent universities.

One such resident caught in the midst of the rental price surge is Jan Hůlek, a 31-year-old living in Prague’s Žižkov district. Having secured his one-plus-one apartment eight years ago, he has witnessed his monthly rent, currently set at 12,000 CZK without utilities, rise by approximately five thousand CZK over the years. Jan’s indefinite contract is updated annually, subjecting him to new payment terms each year.

Jiří Pácal from Central Europe Holding sheds light on the reasons behind escalating rents. Firstly, existing contracts often incorporate inflation clauses that allow landlords to adjust rents annually. Secondly, the influx of new contracts in the market has led to higher demand and subsequently, increased prices.

Lucie Benešová, a student hailing from the Krkonoše Mountains, embodies this trend. Along with her boyfriend, she recently secured a one-room apartment in Prague, similar to Jan’s, but with a considerably higher rent of 18,000 CZK without utilities.

University towns are also grappling with an influx of students searching for accommodations, leading to a rapid depletion of vacant flats on the market. Zdeněk Mikulášek, a broker from Brno, attests to the surge in demand, particularly in recent months.

Among the Czech cities, Prague and Brno bear the brunt of exorbitant housing prices, with average rental prices per square meter surpassing 300 CZK in the second quarter. In stark contrast, the lowest rents are found in Ústí nad Labem.

Projections from industry analysts indicate that rents will continue their upward trajectory, with an estimated ten percent growth by the end of the year, particularly in Prague, the Central Bohemian Region, and university towns, according to real estate broker Lucie Starovičová from Bezrealitka.

Recent estimates from landlords suggest a significant shift in housing tenure, as two years ago, one-fifth of the Czech population lived in rented accommodations. Presently, this proportion has risen to a quarter, although it remains considerably lower than the proportion of people renting properties in Germany or Austria, where more than half of the population resides in rental homes.

As the demand for rental properties continues to soar, policymakers, real estate developers, and housing authorities face mounting pressure to address the housing shortage and implement sustainable solutions to ensure affordable housing options for the country’s residents.

Article by Prague Forum

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