Czechia experiences fastest growing prices of housing in the entire Europe
The Czech Republic has a real housing problem, as the real estate market faces the pressure of high demand. While the salaries are rising, so are the housing prices. All major cities report housing overheating, yet Prague seems to be the most affected.
Governor of the Czech National Bank, Jiří Rusnok, said for daily iDnes.cz that Czechia has the most skyrocketing housing prices in the European Union.
Increase by 20% since last year, by 50% since 2014
Prague reports more people living in fewer apartments and a needed number of new flats nowhere near to getting built.
One square meter is in the district Prague 1 worth 168 000 CZK (6 544,86 EUR), Czech news portal Lidovky.cz informs. The average offer in all Prague districts increased from June 2016 to June 2017 by 22.5% to 92 600 CZK (3 607,46 EUR) per square meter, as Deloitte consultancy data suggests.
The Czech weekly Ekonom (Economist) analyzed the current bids for a wing two-bedroom* or two-bedroom apartments** and compared 2014 bids with 2017 bids. According to Ekonom, Prague is among the three most expensive cities.
In 2014, Prague offered a cheaper wing two-bedroom or two-bedroom apartment for 1,59 million CZK (61 942,42 UR). On this day, a buyer would have to cash out one million more! Similar apartments start at the price of 2,48 million CZK (96 614,59 EUR), with a more than 56% price increase.
In case of buying a new flat, your bank account would be debited with 13.75 million CZK (496 708,09 EUR), in comparison to 2014 when you would have paid out 9.56 million CZK (372 433,67 EUR).
* wing two-bedroom apartment – two bedrooms joined by a small common space (e.g. kitchen) in Czech 2+kk
** two-bedroom – two actual bedrooms, a common living space, and a kitchen which might be separate in Czech 2+1
Sold before even built – negative predictions
According to Ekonom, Prague is short of 3500 offers in real estate market compared to 2014.
“The low number of real estate projects is a clear prediction of another negative period. It seems that vacant flats will drop even more, creating higher prices once again and a massive migration of families along the current line of Prague,” the director of the Association of Developers Tomáš Kadeřábek reflected the situation for Lidovky.cz.
According to Milan Ročko, executive of web portal CenovaMapa.org (Map of prices) people purchase flats mainly as an investment: ”Due to the narrow offer and stable demand, the vast majority of apartments are purchased before they are even built. “
Higher salaries to pay higher prices
Ročko for Lidovky.cz concludes on buyers: “The most frequent buyers of smaller flats are still Czech clients and these customers are very diverse. However, the proportion of foreign buyers also grows.”
The increased minimum wage by January 2018 and a rapid rise of average monthly wage noted in the second quarter of 2017 are results of healthy economy and labor shortage. When an average Prague employee opens his pay slip, in last quarter of 2017, they will find by 2.9% more than last year – 36 584 CZK (1 425,22 EUR) as Czech Daily Denik.cz analysed.
Detailed insight into salaries here.
Brno “lives” in similar conditions
Three years ago, you would become an owner of an older wing two-bedroom or two-bedroom apartment in Brno by paying 1.65 million CZK. In 2017, the lowest price is 1.8 million CZK for such a flat. The lowest price for an apartment has increased by 15%, Ekonom reports.
A new and fancy apartment would be yours for 4.7 million CZK, although in 2014 it would be enough to pay out 3.5 million CZK.
Nowadays, you not only have to be richer, but also luckier to sign your new-Brno-apartment contract of sale.
A shorter supply of free real estate is indeed another effect of prosperous economic conditions. According to Czech news server Aktuálně.cz, the apartment offer in Brno accounts for 234 in comparison to 685 in 2014.
Cheap and undesirable north
Regardless of the the overheated housing market, there are cases of towns in which apartments have been getting cheaper in last 3 years. The cheapest are towns Bílina, Litvínov, and Teplice.
In Bilína, prices has dropped by 33%. Having only 0.1 million CZK is enough to buy a wing two-bedroom or two-bedroom apartment there. 0.6 million CZK in your “pocket” possibly makes you a proprietor of a similar, but fancier new apartment. Within 3 years, the offers get even broader. The housing prices follow the tendency of desire to live there, and they are both steadily decreasing.
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