The average price of new homes sold in Prague reached 101,091 crowns per
square metre by the end of 2018, an increase of 18.6 percent year on year,
a group of developers said on Wednesday.
The number of residential dwellings sold dropped by 9 percent to 5,000 last year, the lowest since 2012, according to data compiled by the developers Trigema, Skanska Reality and Central Group.
The most expensive flats are traditionally in Prague 1 (currently at 198,000 crowns per sqm on average) and in Prague 2 (164,000 crowns per sqm). The most affordable apartments are in Prague 4 and Prague 10, where the average price is 89,000 crowns per sqm.
In terms of price per square metre, smaller flats are more expensive than larger ones, regardless of location, the developers said.
The Prague City Council plans to raise rents on flats now leased out by the
municipality or city administration at below market rates, councillor Adam
Zábranský (Pirates) told the ČTK news agency in an interview.
Zábranský said the council plans to review the contracts of up to 10,000 flats, many of which are rented out at one-third the going rate “for no apparent reason”.
According to the developer Trigema, as cited by ČTK, tenants of city dwellings usually pay 60 to 120 crowns per square metre, so between 4,680 to 9360 crowns for a standard 78 sq m flat. The market rate would be above 20,000 crowns.
The rise in apartment prices in the Czech Republic, which has been extremely rapid in recent years, has come to a halt or at least decelerated, due to Czechs reaching the limits of their purchasing power as well as new mortgage regulations, iDnes.cz reported. However, things are rather different in Prague, the news site said.
The availability of housing in the Czech Republic is the worst in Europe, with a new flat amounting to 11.3 multiple of an average annual income, suggests a study carried out by the international consultancy Deloitte in 14 European countries. Last year, Czechs needed 10.9 of an average annual income to buy a new 70 m2 flat.
It takes Czechs considerably longer on average to save to purchase an
apartment than people in other European states, suggests a new study
produced by consultants Deloitte.
Comparing 12 states last year, the report found that a new flat in the Czech Republic is equivalent to 11.3 years of average pay. Belgians, meanwhile, need the equivalent of 3.7 years’ salary to cover the price of a property of 70 metres squared.
A lack of new apartments on the market is one factor forcing property prices up in the Czech Republic, said a representative of Deloitte. Mortgage regulations, lengthy permit procedures, high taxation and consumer sentiment are other factors.
Czech economic research institute CETA (Centrum ekonomických a tržních analýz) published a study focused on the residential housing market in Prague on Friday, which claims that bureaucratic hurdles, coupled with high demand, are primarily responsible for the current low availability of housing in the capital. It also claims that Airbnb flats, which have been the centre of focus for many councillors, are not to blame.
The saga surrounding the legal case of the bankrupt H-system housing project, which cost over a thousand clients millions of crowns, continues to resonate throughout the country. Many are pointing at the shortcomings of the judicial system and asking the question whether the state should intervene. On Tuesday, the head of the Supreme Court suggested the state should step into the case and compensate the damaged clients.