It takes 25 years of rent to pay off an apartment in Czechia

As property prices tick back up, a study has revealed the regional disparities in Czechia in terms of how long an apartment 'pays for' itself.

Expats.cz Staff ČTK

Written by Expats.cz StaffČTK Published on 02.07.2024 11:33:00 (updated on 02.07.2024) Reading time: 3 minutes

Based on current rent and property-purchase prices in Czechia in the second quarter, the average 65-meter apartment would pay for itself in 24.8 years – a leap from 19.5 years before the Covid-19 pandemic. However, this is a shorter time than in spring 2022, when it would take 30 years’ worth of rent to pay fully for a property, following a surge in house prices.

Analysis by real estate portal Bezrealitky.cz found a large disparity between Czech regions in terms of how long it takes for a property to “pay for itself.” For example, in the Ústí nad Labem region, it takes the least amount of time – 16.5 years – to pay off an apartment. In the Karlovy Vary region it takes 19.4 years and in the Moravian-Silesian region the duration is two decades.

Situation is worst in the capital

It’ll likely come as no surprise to learn that in Prague it takes the longest amount of time to pay off an apartment, at over 29 years. This is likely underpinned by the ever-rising cost of rental prices: experts estimate that rents rose by between 5 and 10 percent in 2023. 

Earlier this year, a separate study from Politico found that, in the Czech capital, apartment prices surged 50 percent over the past five years, while rents increased 30 percent.

According to Bezrealitky executive director Martin Ponzer, people who want to invest in property must not take only into account the return coefficient. According to him, the data serves to reveal the disparity between property price and rent on the market. This data can show where there is potential for real estate values and rents to increase, or where the market may reach a balance. 

According to the latest data from consulting firm Deloitte, the average rent in the Czech Republic was CZK 295 per square meter in the first quarter of this year. The monthly rent for a 60 square meter apartment would thus cost CZK 17,700 crowns without fees. The average selling price of an apartment in the Czech Republic was CZK 95,000 per square meter in the fourth quarter of last year.

Prices going up again

Data from the Valuo.cz real estate portal shows that apartment prices are starting to rise again after the decline last year. Although prices in Prague are more or less stable, prices in Karlovy Vary and Ostrava rose by more than 9 percent year on year in the first quarter. Only the cities of Jihlava and Ústí nad Labem recorded a slight decrease. 

The maximum prices of apartments were reached almost exclusively in the first half of 2022, and compared to these values – apart from a few exceptions – the current prices of apartments recorded a drop of up to 21 percent. Currently, prices are comparable to late 2021 levels.

Experts predict that rental prices will rise this year by around 5 percent, and the Czech Rental Association forecasts that average selling prices could surge by up to 10 percent after demand increases thanks to recently lowered mortgage rates in Czechia. 

The housing situation in Czechia has long been rather dire – particularly so in the capital. A study from the end of 2023 found that the average Prague apartment would cost 15 annual salaries, and separate research revealed that Czechia is the second-least affordable country in Europe to purchase property.

The City of Prague’s Institute of Planning and Development (IPR) said earlier this year that average rents in the capital cost almost 40 percent of gross monthly salaries. IPR also noted that 20 percent of households in Prague face “disproportionate housing costs.”

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