High prices and low wages – Czechia is the second most expensive European country to purchase property
New numbers are revealing that Czechia is home to one of the most expensive real estate markets in Europe – it would take 13 gross annual salaries to purchase property in the country. This year, Czechia is falling behind Slovakia, the neighbouring nation taking the first place spot. We spoke to Petr Hána who works at Deloitte here in Prague about the market situation.
Czechia is the second most expensive country in Europe right now for real estate, it would take roughly 13 gross annual salaries to buy a property of 70 square meters – what is driving this increase?
“Czechia has been in this position for quite a long time. What is driving this is that we are quite a small market, with one dominant city – Prague, this is where the majority of transactions are taking place on the residential market. To be honest, we have very high price levels compared to other European countries, and also very low wages compared to other European countries.”
I read earlier this year that only 5% of the property in Prague is owned by the city. Is the fact that there isn’t so much control from the state level in terms of the property here a factor for values to really go up?
“Well the thing is, is the regulation really needed? Till the 90s, all apartments were rent apartments because of the political situation here in the Czech Republic. But from 1989, there was a privatisation of the market, and that created the free market, which is really important for the Czech economy.”
But is there a balance that needs to be struck between having a free market, and also having regulation so it’s more affordable for more people?
“The thing is, we have a private residential market, but there should also be another part of the market that focusses on social needs and affordable housing that could be created by the city, municipality or the state.”
What about renting in Czechia, what’s the affordability like?
“The affordability of rental housing is much better than the affordability of purchasing housing, but the situation is that we are still the fourth most expensive country in Europe. We can say that rentals in Prague are at a price level of 370 crowns per square meter right now. The most expensive rental market in Europe right now is Amsterdam.”
Is there any indication that the market is cooling down a little bit right now or are prices projected to continue rising?
“In terms of prices, the market in the Czech Republic is slowing down. There are fewer transactions and prices are stagnating on the primary market, and decreasing on the secondary market. We can also see similar trends in rents, rents are still raising but they are not rising dramatically.”
