Number of apartments on the Prague rental market hits eight-year low

Prague rental prices have been soaring over the past years, and one of the primary reasons is the lack of available apartments. According to recent survey by rental management company GarantovanyNajem.cz, the number of flats available on the Prague rental market is currently the lowest it has been over the past eight years.

The recent influx of refugees from Ukraine, as well as the return of tourists to the Czech capital after two years of pandemic restrictions, have both been identified as potential causes for the sudden lack of apartments on the Prague rental market.

An additional, and perhaps greater, cause is the sharp drop in mortgages in the Czech Republic over the past year. Last month, Czech banks reported new mortgage loans were down about 40 percent year-on-year.

While some buyers take out a mortgage to purchase an apartment for their own accommodation, others do so as an investment and rent out the property they mortgage. Fewer mortgages being taken results in fewer potential landlords.

Additionally, those who take out a mortgage to purchase an apartment as an investment will be more motivated to generate revenue from the property by renting it out, compared to larger companies with the capacity to sit on a property for long periods of time.

"Smaller and more affordable flats are disappearing from the market almost immediately, with approximately 15 people inquiring about a single offer," a representative from real estate company RE/MAX told ČTK.

"More expensive flats stay on the market longer, but they are still rented out much faster than before."

According data shared by GarantovanyNajem.cz, there are currently about 4,700 apartments on the Prague rental market. That's a precipitous drop from 2020, when pandemic effects resulted in about 15,000 Prague apartments available for rent. In 2014, there were approximately 7,000 apartments on the market.

Apart from pandemic effects, the number of apartments available on the rental market has been in decline since 2019, and is expected to continue to fall. In the immediate future, the situation is expected to worsen over the summer due to anticipated seasonal fluctuations. 

"This year it continues to decline," says Josef Kupec, a construction and real estate expert from the KPMG.

"The primary reason is relentless migration to Prague and the great growth in demand for rent. People are moving away from [purchasing and living in their own apartments], which is becoming less and less affordable due to increasing prices."

Along with the lack of available options on the market, rental prices are soaring. According to the real estate portal Realitymix.cz, rents in Prague and Brno have risen by an estimated 18 percent over the past year.

Due to the rapidly-changing situation, Prague landlords are becoming less likely to sign long-term contracts with potential clients.

"Due to inflation and other factors such as rising interest rates, renting real estate is no longer as profitable as it was before," says GarantovanyNajem.cz co-founder Viktor Mejzlík.

"In order to protect their income, [landlords] will want to sign contracts with tenants for a shorter period of time, and raise their rents at the end of the contract."