In the Czech Republic, soaring property prices are forcing potential homeowners to downsize their dreams. A recent trend shows that three-quarters of new apartments sold in Prague are either one or two-room units, with demand for the smallest flats intensifying. This shift is driven by affordability concerns and investment potential, as smaller units require less capital and are easier to rent out.
The surge in interest for compact living spaces is confirmed by both developers and banks. Filip Hrubý, spokesperson for Česká spořitelna, reports that in 2023, over 40% of mortgage-financed purchases were for smaller apartments. The bank anticipates that these compact units will constitute the majority of purchases this year. UniCredit Bank has also noted an uptick in mortgages for such properties, particularly among applicants aged 30 to 40.
The trend towards smaller apartments is fueled by the fact that homeownership in the Czech Republic is among the least affordable in Europe. According to a Deloitte analysis, Czechs need 13.3 annual salaries to afford a 70-square-meter apartment in a new building – the highest figure among European countries. With prices continuing to climb, a square meter in a new Prague development now costs over 160,000 crowns, pushing a 70-square-meter apartment beyond the 11 million crown mark.
Developers are responding to this shift in demand by offering more compact living spaces. Since 2018, the average size of all properties on the market has decreased by 10.6 square meters to 63.5 square meters. Some projects are even featuring extremely small apartments of around 20 square meters. This trend is most pronounced in Prague and larger cities, with less impact observed in more affordable regions like Northern Bohemia and Northern Moravia.
As living spaces shrink, the real estate market is adapting to new realities. With limited supply of new apartments and high construction costs pushing prices upward, industry experts like Kateřina Poláková from Knight Frank predict that housing costs will continue to rise in the future. This ongoing trend underscores the changing landscape of urban living in the Czech Republic, where efficiency and affordability are becoming increasingly paramount.