In a paradoxical twist, Czech households have seen their net worth increase by an average of four million crowns in recent years. However, this newfound wealth is largely illusory, stemming primarily from skyrocketing property values. Despite the apparent financial gain, many Czechs are struggling to make ends meet as inflation erodes their purchasing power.
The Czech Statistical Office reports that between 2020 and 2023, the net worth of households surged by nearly nine trillion crowns, reaching a staggering 25 trillion. This figure represents the total assets minus total debts, with the latter also increasing by over 433 billion crowns during this period.
Petr Dufek, chief economist at Banka Creditas, cautions against overestimating this wealth increase. He points out that wealth distribution is highly uneven, and property valuations play a significant role in these calculations. With three-quarters of households owning their homes and nearly a quarter owning additional properties, the country appears to be teeming with millionaires on paper.
The reality, however, is far less rosy. While the average 70-square-meter apartment that cost just over four million crowns in 2019 now fetches nearly seven million, many homeowners struggle with basic expenses. Dufek notes that owning a valuable property doesn’t necessarily translate to financial comfort, as many can barely afford to heat their homes or maintain proper insurance.
The disparity between asset values and actual living standards is stark. Cumulative inflation in the Czech Republic over the past four years has reached 35%, while real wages have declined by almost 8% between the last quarter of 2019 and the first quarter of this year. Despite their increased net worth, this economic squeeze has left many Czechs feeling poorer.
The situation in Prague, often considered the country’s wealthiest city, illustrates this paradox. Even households with seemingly high incomes find it challenging to cover basic expenses. Martina Mikulecová, a Prague resident, shares that despite a combined monthly income of over 80,000 crowns net, her family barely manages to cover mortgage payments, bills, food, and children’s activities, with little left for dining out or cultural events.
As the Czech Republic grapples with this economic contradiction, it’s clear that paper wealth doesn’t always translate to real-world prosperity. The nation finds itself in the unusual position of being asset-rich but cash-poor, a modern twist on the age-old tale of appearances versus reality.