Prague’s cheap rent bubble has burst with a return to pre-pandemic prices

The Covid pandemic has been a cause of grief in various different ways, but at least one positive emerged from the crisis. Czech rent prices decreased dramatically as a result of Covid-related uncertainty and a reduction in demand for short-term holiday accommodation, bringing more properties onto the longer-term rental market.

Now, though, data from the Sreality.cz online real estate portal suggests Czech rent prices have recovered from their pandemic-related downturn. The effects of the pandemic on the economy are only now making themselves known through rising inflation, but international travel has become easier and the great uncertainty of Covid’s early months is becoming an ever more distant memory.

Rent prices have been rising throughout the Czech Republic for the last few months. In Prague, prices are now catching up with the historical highs seen in late 2019 and early 2020. Prague rent prices are now around CZK 310 per square meter a month on average.

“In the autumn of 2019 rental prices were at their highest, climbing to CZK 340 per square meter. After the introduction of the first Covid measures in April 2020, we recorded a sharp drop in prices,” said Hana Kontriš, Sreality.cz advertising manager, to Seznam Zpravy.

“We’ve seen an increase towards original price levels for Prague flat rentals since June this year, but we’re not approaching the prices seen in April 2020, at the start of measures against Covid. The lowest prices were seen this year before the summer holidays,” she continued.

The portal’s data suggests price increases are being driven by greater demand. The length of time in which properties are advertised online has shortened, and their average number of views per day is increasing.

Price increases aren’t limited to Prague. Rent rates are rising throughout the country, although the regions recorded less severe fluctuations than the capital city. It’s thought the extreme changes in Prague were partly the result of vacant Airbnb flats flooding the rental market due to a lack of international tourism.

As tourism resumes, most of these properties will return to the short-term holiday rental market, reducing the available housing stock for rent and therefore driving up rent prices. For this reason, it’s expected that prices in Prague will continue to rise faster than in other parts of the country in the coming months.

With home-ownership an unaffordable dream for many, Prague’s rental market became an even more attractive alternative during the pandemic. But if the recovery from Covid continues despite the arrival of the Omicron virus variant, prices could be about to continue their upward trajectory even further.