Czech Real Estate Prices Expected too Surge
The Czech National bank (CNB) predicts that apartment and house prices in the Czech Republic will continue their upward trajectory in the coming years. Their latest forecast projects a 5.7% increase in 2024, followed by approximately 4% growth in 2026. This year, prices are already on track to rise by an average of 6.8%. The CNB closely monitors the real estate market due to its impact on the banking sector. While the forecast aims to capture prevailing trends, the CNB acknowledges that actual price movements could differ.In fact, they anticipate a possibility of even stronger price growth next year, deviating from the autumn forecast. “The mismatch between supply and demand for real estate caused by relatively low construction and the potential intensification of demand pressures in selected regions may contribute to the fulfillment of the scenario with higher price growth,” the CNB report states.Rising Prices Mean Big Costs for Buyers
Data from consulting firm Deloitte, which the CNB considers, shows the average apartment price in the Czech Republic reached 101,700 crowns per square meter at the end of the second quarter. This translates to over seven million crowns for a 70-meter apartment. If the CNB’s projection holds true, such an apartment could cost roughly 800,000 crowns more by the end of 2024. Initially, the CNB had anticipated a more stable price growth of around 5% annually for this year and next.However, strong buyer interest, fueled by expectations of future appreciation and prompted by initial mortgage rate reductions, has accelerated the pace. Some financial institutions predict even stronger price growth. Komerční banka,for example,forecasts an 8.6% increase, attributing this to continued declines in mortgage rates and a tendency for households to invest in housing. Kevin Tran Nguyen, an economist at Komerční banka, explains: “Structural factors also persist, such as a mismatch between the fundamentally strong demand for owner-occupied housing and the supply, or high interest in real estate investment assets.”The Czech housing market is facing a significant affordability crisis. Buying a home is increasingly out of reach for many, as soaring prices continue to make homeownership a distant dream for a growing number of Czechs. Data from the Czech National Bank (CNB) reveals that potential buyers currently need an income equivalent to 12.5 times the average annual salary to purchase an apartment.
This challenging landscape has pushed many individuals towards the rental market, leading to a surge in rental costs. Experts predict that this upward trend will persist, with rents projected to increase by 5 to 10 percent next year, according to an analysis by Knight Frank.
Czech republic Faces Rising Rental Costs
The Czech Republic is grappling with some of the least affordable housing in Europe. The rising cost of buying a home has forced more people into the rental market,further driving up rental prices. This situation has created a vicious cycle, making it increasingly difficult for individuals to find affordable housing.
Rental Market Projected to Remain Tight
RENTAL COSTS ARE BREAKING RECORDS and this trend is expected to continue in the coming months. This is according to experts who cite increased demand as a key driver of this upward trajectory. For those seeking rental accommodations in the czech Republic, the outlook remains challenging.
Rents are breaking records, and will continue to rise in the coming months
Economic
