According to the latest Property Index from Deloitte, the Czech Republic has been ranked the second least affordable country in Europe for homeownership. On average, it takes 13 gross annual salaries to purchase a property of 70 square meters, which has remained steady from last year. Prague is the third most expensive city for homebuyers, after Amsterdam and Bratislava, with an average of 14.3 gross annual salaries required to purchase a property in the capital.
Residential property prices have risen by 12% in the Czech Republic, alongside 22 other countries. The average cost of housing has increased from €3,342 ($3,940) in 2021 to €3,753 ($4,420) per square meter. According to Miroslav Linhart, Head of Financial Advisory Services at Deloitte, the residential market in the Czech Republic experienced a sharp drop in apartment sales due to the tightening of the monetary policy of the Czech National Bank.
Despite the high costs of homeownership, renting is relatively affordable in the Czech Republic compared to other European countries. Prague ranks 23rd out of 66 cities in average monthly rental prices, averaging €14.4 ($17) per square meter.
In the face of rising rental prices, the demand for rental properties has grown, especially in regional cities. As a result, more investors and developers are beginning to focus on building rental projects. According to Petra Hány, Director of Real Estate and Construction at Deloitte, rental housing is experiencing a boom in all regional cities.
The Deloitte Property Index indicates that the most affordable homeownership in the EU can be found in Belgium and Norway, where residents need less than five gross annual salaries to buy a property. Denmark and Slovenia follow closely behind. In contrast, according to Deloitte, Israelis paid the highest prices for new buildings last year, spending an average of €5,701 ($6,712) per square meter.
The Czech residential market is expected to remain challenging for homebuyers shortly. Nevertheless, the booming demand for rental properties may be an excellent alternative to home ownership, especially for those not yet ready to commit to homeownership.