Internationally regarded as a beautiful city, it is perhaps unsurprising that property prices in Prague have been rising steadily since the Velvet Revolution. However, this has also led to flats becoming increasingly hard to purchase.
According to the latest index produced by Central Group, the largest residential developer in the Czech Republic, the average number of annual salaries needed to cover the purchase of a 70 square metre home in Prague lies at just below 14. This is considerably more than in the neighbouring metropolises such as Munich (11.8), Vienna (8.7) or Berlin (8.0).
The chief analyst of Central Group, Ondřej Šťastný, says that the main reason behind this phenomenon is the slow approval process for new construction projects.
“There have been long term calls for the construction of at least 10,000 new flats in the city of Prague. However, only around a third of building projects actually get approval.
“This leads to long-term divergence between supply and demand, raising proprietary prices and making it increasingly harder for people to buy their own home.”
Aside from low affordability, the Czech Republic is also below the EU average when it comes to the actual size of flats, with developers increasingly choosing to focus on offering small, one or two bedroom flats. For example, these properties accounted for 70 percent of the sales made by developer Trigema between 2019 and 2020, compared to 50 percent in 2017.
According to Mr. Šťastný, this is down to the fact that small flats are both more affordable for young couples while also providing the best investment opportunity for prospective landlords looking to rent them out.
However, he says that there are also historical reasons for the small average size of properties in the country.
“The common flat is on average about 50 years old. Between the 1950s to the 1980s, flats were usually constructed to range in the size from 40 to 50 square meters. Their size only began to get bigger from the 1990s, rising gradually from 50 and 60 square meters up to 80 in the year 2012.
“Another reason is that people tend to live in flats in this country and these are usually smaller than houses. In Ireland, for example, it is common for people to live in their own house.”
It should also be noted that the demand for small flats is the highest in large Czech cities.
Aside from obvious affordability reasons, Mr. Šťastný also says that this can be partly explained by the rising “mingles” phenomenon, wherein couples are increasingly choosing to live separately in their own homes.
The material was brought up by employees of CzechTrade Scandinavia.
Using the source: Czech Radio,Tom McEnchroe
Photo: Ralph Kayden, Unsplash / CC0
Photo: Michael Gaida, Pixabay / CC0 Photo: Archive CzechTrade