Flat prices in Brno pass CZK 100,000 per square meter for the first time

The Czech Republic is one of the most expensive countries for house buyers in Europe. Recent studies have shown how growth in real estate prices has far outstripped growth in wages, meaning properties are proportionally much more expensive in Czechia than elsewhere in the EU.

More ominous news has now arrived with an analysis showing that apartment prices in Brno, the Czech Republic’s second-largest city, have passed the CZK 100,000/sq m mark for the first time.

Apartment prices in the Moravian capital rose by a fifth year-on-year, according to FérMakléři.cz. The analysis was based on cooperation with over a hundred Czech real estate agents. In the first quarter of 2021, the average flat price in Brno was CZK 86,126/sq m, but now it is as much as CZK 103,316/sq m.

The price growth can be attributed to a range of factors including scarcity of affordable housing, inflation throughout the economy, and the ramping-up of tourist short-term rentals following the relaxation of pandemic restrictions. Even in this context, though, Brno’s house price growth is alarming.

Prices are rising at a lower rate in Prague. The capital city is still the most in-demand location in the Czech Republic, with an average price of CZK 126,140/sq m. This constitutes a 17 percent increase on Q1 2021, according to the analysts.

“The shortage of flats in the Czech Republic is a long-term phenomenon, as is very low unemployment. Added to these are record inflation, a base interest rate last seen in 2001, and uncertainty relating to the war in Ukraine,” FérMakléři.cz CEO Lumír Kunz told the Czech Press Agency.

Kunz also noted that demand for new housing has slowed since the outbreak of war in Ukraine. The relative drop-off in demand may also be linked to rapid interest rate hikes by the Czech National Bank, which have made getting a mortgage significantly more expensive.

The National Bank has also introduced new rules for obtaining mortgages which are particularly strict for people over the age of 36. The rules have been criticized by industry experts for making it extremely difficult for middle-aged people on average earnings to ever own their own home.

Still, the most significant apartment price increases over the past year have not been seen in Brno, according to analysts, but in Ústí nad Labem. The city saw a huge 56.6 percent increase in average prices year-on-year.

Other cities which saw particularly significant yearly increases were Ostrava, Olomouc, Hradec Králové and České Budějovice.