An average Prague apartment will cost you 15 annual salaries, study shows

Praguers need to spend almost 15 average annual gross salaries to afford a new, 70-square-meter apartment in the Czech capital, according to new data from Czech residential developer Central Group. Although this represents a slight decrease from one year ago, the extremely slow construction of new apartments poses a concern for developers.

At an average price of around CZK 10.5 million for a new 70-square-meter apartment, Central Group notes that housing affordability remains a pressing issue in the capital. This is worsened by supply-and-demand issues whereby a lack of newly constructed buildings keeps prices high for homebuyers.

Central Group reports that while 143,000 future apartments are waiting to be greenlighted for construction in Prague, only 5,000 permits are granted annually – half of what the city needs to keep up with demand. The Czech Statistical Office currently assumes that there is an 80,000-apartment housing deficit in the city due to slow construction processes.

Although the country’s new Building Act amendment, meant to come into force next year, is meant to increase and expedite the number of building permits given, the real estate industry is “in panic” as to whether all necessary regulations will be prepared in time, Central Group says. Data from the World Bank also shows that, on average, it takes 246 days to obtain a construction permit in Czechia – the second-longest time in the EU.

Amidst these hurdles, there is a silver lining – new apartment prices nationwide have declined by around 2.4 percent year on year in recent months. In Prague, the Deloitte Real Index 2023 for the second quarter of this year found that apartment prices dropped 2 percent year on year. This is likely partly caused by currently high mortgage rates in Czechia – now at around 6 percent – that constrain demand.

There is still, however, huge disparity between Prague and the rest of the country in terms of apartment prices. Purchasing one square meter of real estate costs CZK 114,500 in Prague, compared with a national average of CZK 90,000 and – for example – CZK 74,400 in Central Bohemia.

"The willingness to buy new apartments is decreasing. Developers respond to this with various sales promotions or changing the sale price. I don't really expect the situation to change significantly in the coming months," comments director of the real estate and construction department at the consulting company Deloitte Petr Hána in Seznam Zprávy. In the first three quarters of the year, 1,700 apartments were sold in Prague – less than half compared with the same period in 2021. 

A study by accounting firm Deloitte earlier this year also found that Czechia was the second-least affordable country in all of Europe to buy property, partly explaining low apartment sales in 2023.