Deloitte study: Czech Republic has second-least affordable housing in Europe

It now takes over 12 average annual salaries to buy a flat in the Czech Republic, and prices are currently rising fastest in Brno.

Raymond Johnston

Written by Raymond Johnston
Published on 19.07.2021 12:33 (updated on 26.07.2021)

The affordability of new housing in the Czech Republic last year was the second-worst in comparison with 22 European countries. A new flat in the Czech Republic will cost 12.2 average gross annual salaries, while a year earlier it was 11.4 salary, according to a study by the consulting company Deloitte. The Czech Republic had been the worst place in terms of affordability in 2017–19.

“For the first time, the least affordable own housing has been found in Serbia, which ended second in this measure last year. Buyers in Serbia needed an average of 15.2 gross annual salaries to purchase a standardized dwelling, ,” the Deloitte Property Index: Overview of European Residential Markets stated.

“After four years in the first position, the Czech Republic recorded the second-least affordable housing among the participating countries with an average of 12.2 gross annual salaries to purchase a standardized dwelling,” the survey stated.

Housing in the Czech Republic is significantly more expensive than in neighboring countries, even though Slovakia and Austria tied for third place. “Similar to last year, potential buyers in Slovakia and Austria would spend around 10 average gross annual salaries to purchase a 70 square meter dwelling,” the survey stated. In Poland, the index was at 7.6 salaries, and in Germany at 6.0 salaries.

The relatively cheapest place to get to buy a flat is Ireland, where people spend 3.1 years of salary on an average new apartment with an area of 70 square meters. Other countries at the lower end were Belgium at 4.2, Portugal at 4.4, and Bulgaria at 4.8. The situation is not likely to improve.

“Developments in the affordability of home ownership have resonated across Europe over the past few years, with 64 percent of countries expecting the availability of home ownership to worsen in post-pandemic years,” Miroslav Linhart, managing partner at Deloitte, told the Czech News Agency (ČTK).

Although new housing in the Czech Republic is the least affordable in relation to wages, the actual prices do not reach the level of Western countries. The most expensive housing is in Austria with an average price of EUR 4,457 per square meter. The cheapest was Bulgaria with a price of EUR 578 per square meter.

In the Czech Republic last year, the average selling price of new flats rose by 8.5 percent year-on-year to EUR 2,822 (approximately CZK 72,275) per square meter. Prices rose the most in Hungary, by 12.3 percent, and the Netherlands by 10.8 percent, compared to the previous year. In Norway, by contrast, they fell by 4 percent. Italy and Bosnia-Herzegovina also saw drops between 1 and 2 percent each.

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Increases were not uniform across the country. In the Czech Republic the largest increase in housing costs was in Brno, which rose 14.2 percent compared to the previous year, to reach EUR 2,856 per square meter. Prices in Prague rose 6.7 percent to reach EUR 3,624 per square meter, and in Ostrava rose 5.6 percent to reach EUR 1,777 per square meter.

“In comparison with European capitals, the most expensive city is Paris, where the square meter costs EUR 12,917. The largest year-on-year price growth of the monitored capitals was recorded in Bratislava, up 13 percent. The only capital where residents paid less to buy last year was Rome, down 3.1 percent,” Petr Hána, Deloitte's real estate manager said.

Quarantine has also significantly affected the rental market in European capitals. “In tourist destinations such as Barcelona, Budapest, Madrid, Prague and Amsterdam, there has been a decline in short-term accommodation rentals and an increase in long-term apartment rentals,” Jakub Leško of Deloitte Real Estate said.

Last year's rent was the most expensive in Paris, at Eur 28.60 per square meter per month. This was followed by inner London at EUR 26.07, and Oslo at EUR 24.72. The cheapest rent was from the monitored European cities in Burgas at EUR 2.90. In Prague, a square meter was rented for an average of EUR 11.46 per month, in Brno for EUR 9,79, and in Ostrava for EUR 6.54.

 Number of annual salaries needed to buy a 70 sqm apartment:

  • 1.Serbia 15.2
  • 2.Czech Republic 12.2
  • 3.Slovakia 10.6
  • 4.Austria 10.6
  • 5.Israel 9.2
  • 6.Latvia 8.9
  • 7.Slovenia 8.6
  • 8.Hungary 8.4
  • 9.Croatia 8.1
  • 10.Poland 7.6
  • 11.Romania 7.0
  • 12.Bosnia and Herzegovina 6.8
  • 13.United Kingdom 6.6
  • 14.The Netherlands 6.2
  • 15.Italy 6.0
  • 16.Germany 6.0
  • 17.Denmark 5.6
  • 18.Norway 5.1
  • 19.Bulgaria 4.8
  • 20.Portugal 4.4
  • 21.Belgium 4.2
  • 22.Ireland 3.1

Source: Deloitte

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