Property prices continue to rise in Czechia – especially Prague

House prices have increased in the capital and broadly across Czechia, according to new figures. A property index from consulting firm Deloitte has found that this rise is due to a combination of lower interest rates and improved economic conditions in the country.

In Prague, the most significant price increases were seen in the city's most expensive areas, such as Prague 1 and Prague 8. However, prices fell slightly in Prague 4 and Prague 6. While the interest in new apartments remains high, the average price for vacant apartments in the capital has more than doubled in the past 10 years. According to Petr Hána from the Deloitte study, this trend is expected to continue in the near future. Experts expect prices to tick up by up to 5 percent on average in Prague.

New apartments in Prague 8 saw a 10-percent increase in price, reaching an average of CZK 157,700 per square meter. Similarly, the average price for apartments in Prague 1 increased by 5 percent to CZK 252,900 per square meter, while Prague 10 saw a 3.5 percent rise. 

According to an analysis by real estate firm Knight Frank, the trend of higher prices is primarily driven by the high demand for smaller apartments, which is considered a profitable investment by some and the only option for others to own property in the city. 

In the second quarter, rents for older apartments in major Czech cities rose by hundreds of crowns per month, costing an average CZK 16,300 monthly. In Prague, rental prices saw a year-on-year increase of 2 percent for 1+1 apartments and 8 percent for 2+kk apartments. 

The average rent for smaller apartments with fewer rooms exceeded CZK 14,000 per month, while 3+kk apartments could reach up to CZK 30,000. Similarly, rents in Brno also saw a significant increase, with a 10-percent rise in prices for 1+1 apartments.

According to Michal Hrbatý, the executive director of UlovDomov.cz, the increase in rental prices has slowed down in the second quarter, but owning property is still more expensive than renting. The continued reduction in interest rates – declining from 7 percent at the end of last year to 4.75 percent today – may in the future make buying more attractive than renting.

"Together with the Czech National Bank's preference to lower interest rates and thereby release more money into circulation, we expect an increase in the purchasing power of households and companies. In the coming period, the real estate market will be driven mainly by interest rates and material prices," business director of finance firm Ronda Invest Lukáš Blažek told Czech business magazine Finmag.cz.

For a long time, the housing situation in Czechia has been difficult, especially in the capital. The average price of a Prague flat, according to a study conducted in the end of 2023, would be equivalent to 15 salaries a year. Other studies also showed that Czechia is the second-most expensive country in Europe to buy real estate.

Earlier this year, the Institute of Planning and Development of the City of Prague reported that average capital rentals came to over 40 percent of gross monthly income.