Rising Rental Prices in Czech Republic Drive Preference for Leasing Over Homeownership

In a pursuit of more affordable living, a growing number of Czech citizens are favoring rental accommodations over homeownership. Despite a slight dip in flat prices in recent months, the overall cost of housing remains high for average-income households, prompting a surge in demand for rental options. This preference for leasing mirrors the lifestyle observed in Western Europe, where rental accommodation is more prevalent, and approximately one-fifth of the Czech population currently opts for renting.

While the slow pace of construction restricts the supply of new flats to the market, rental prices are on the rise, particularly in major real estate markets such as Prague and Brno, along with various district towns. Consulting company Deloitte has reported increases in rental prices, with some areas experiencing unexpectedly significant gains while others witness a decline.

High mortgage rates contribute to the challenge of property ownership, making rental options more appealing to individuals. According to Petr Hána from Deloitte, the principle of supply and demand is driving these price fluctuations, where areas with higher demand experience price increases. Prague saw an almost five percent year-on-year increase in rental prices during the third quarter, while Brno experienced an eleven percent rise. Notably, Domažlice and Rokycany observed a remarkable one-third increase in rents.

The disparity between the most and least expensive places in the country is substantial. In Prague, the average rent for a three-room flat of 60 square meters surpasses 23,000 crowns per month, while in Karviná, a tenant pays 9,700 crowns, Jeseník 10,500 crowns, and Teplice and Náchod 10,860 crowns.

Deloitte reports that the average price for the entire Czech Republic in the third quarter of this year was around 293 crowns per square meter, marking a 4.6 percent increase compared to the second quarter. This ongoing price escalation has significantly impacted the average monthly rental costs, with real estate experts noting that the average rent for flats with an area of 53 square meters has surpassed 14,000 crowns per month, representing a notable increase from a decade ago. The evolving dynamics of the housing market underscore the challenges and evolving preferences in the Czech Republic’s residential landscape.

Article by Prague Forum

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