The Czech real estate market continues to adapt to the new economic conditions that have emerged in recent months. These changes impact both housing purchase prices and rental rates, reflecting the influence of rising interest rates, inflation, and the overall state of the economy. Key trends include increasing rental costs, declining activity among private buyers, and growing interest from investors. Let’s take a closer look at each aspect.
One of the most notable trends in the Czech real estate market is the steady rise in rental costs. According to data provided by Deloitte, in the third quarter of 2024, the average rent nationwide increased by 1.6% compared to the previous quarter, reaching 310 Czech korunas per square meter. This growth was driven by higher demand for rental housing, largely due to the inaccessibility of mortgage loans for many residents.
Rental rates have risen particularly sharply in Prague. In the capital, the average rent reached 422 korunas per square meter, which is 3.4% higher than in the second quarter. The most significant increase was observed in the prestigious Prague 2 district, where rental rates rose by 5.5%, reaching 477 korunas per square meter. This can be attributed to high demand from students, professionals, and families unable to afford property purchases.
Rental rates are not only climbing in Prague but also in other major cities across the Czech Republic. Brno, the second-largest city in the country, is also experiencing a rise in rental costs, albeit at a more moderate pace. Overall, the demand for rental housing remains high, especially among young people and temporary workers.
The second key trend is the decline in activity among individual buyers. This trend has been particularly noticeable over the past two years, as the market has faced rising interest rates on mortgage loans. Many Czechs who had previously planned to purchase housing are now postponing their plans indefinitely, creating a significant gap in the primary and secondary property markets.
High mortgage interest rates, averaging 6–7% annually, make property purchases less affordable for the middle class. This is particularly challenging for young families who traditionally rely on mortgages to buy their first homes. According to analysts, the rejection rate for mortgage applications has increased by more than 20% over the past year. As a result, many potential buyers are turning to the rental market, further driving demand for rental housing.
