Czechs must pay an average of 11.2 average annual salaries to purchase a new apartment with the size of 70 m2. Compared to selected European countries, the situations is the worst in the Czech Republic. In the runner-up country – Latvia – 10.1 annual salaries are needed to acquire a new flat. In contrast, flats are the easiest to acquire in Portugal (3.8 annual salaries). These are some of the conclusions of the latest Deloitte Property Index 2019.
“The Czech Republic is closing the gap on Western countries in terms of transactional prices. The average price in the Czech Republic grew by 16.8% on the prior period. Prague recorded the sharpest growth from among the regional capitals. Specifically by 22% to EUR 3,162 per m2,” says Petr Hána, Senior Manager at Deloitte’s real estate service line.
However, despite the considerable increase, prices in the Czech Republic have still not reached the level of Western countries and cities. This year, the most expensive country is Norway, where the average transactional price has exceeded the threshold of EUR 4,000 per m2. In terms of cities, Paris or London is still almost four times as expensive as Prague. The German or Belgian cities included in this year’s Property Index also record higher prices.
“The increase in apartment prices in the Czech Republic is driven by growing construction costs, the Czech National Bank’s regulatory measures and lengthy approval processes. However, the real estate rush is slightly on the wane and, therefore, a certain decline in sales in all areas may be expected. Despite this, a decline in prices remains to be fairly unlikely,” says Vojtěch Petrík, Senior Consultant at Deloitte’s real estate service line.
Almost 34,000 apartments were completed in the Czech Republic last year, which is more than three new apartments per 1,000 people. The greatest number of apartments was finished in France (459,800 apartments), where the greatest number of apartments per 1,000 people were also finalised (6.9). France also tops the list in terms of construction projects in the pipeline, with the construction of almost 420,000 apartments being prepared. The fewest apartments – 2,100 – are going to be constructed in Latvia. In the Czech Republic, more than 33,000 new apartments are under construction.
“Compared to Europe, the Czech housing stock is rather average. There are more than five million apartments in the Czech Republic and, in terms of the number of apartments per a thousand people, we are equal to Norway and Denmark. The most apartments per a thousand people can be found in southern states, the greatest number specifically in Portugal (579,8), while the fewest in Poland,” adds Petr Hána.
The differences in prices are considerable across Europe. Monthly rents are the most expensive in Inner Paris (EUR 27.8 per m2), followed by the Norwegian cities Oslo (CZK 25.3 per m2) and Trondheim (EUR 21.3 per m2). Among the monitored countries, the cheapest rents are in Debrecen, Hungary (EUR 6.4 per m2). In Prague, a square metre costs EUR 13.4. Rental in Brno costs EUR 9.6 per m2 and in Ostrava EUR 6.6 per m2.
Analysts also focused on the average mortgage interest rates. At the end of last year, the average Czech mortgage rate oscillated around 3%, ranking among the highest in Europe. The lowest rates were in Portugal (1%), the highest in Hungary (4.5%).
The study compares a total of 16 European countries; besides the Czech Republic, they include Austria, Belgium, Croatia, Denmark, France, Germany, Hungary, Ital, Latvia, the Netherlands, Norway, Poland, Portugal, Spain and the United Kingdom.
To view Deloitte Property Index 2019, follow this link.