Purchase prices for apartments continue to rise. In the first quarter, prices rose in all regional capitals, with the greatest interest being in small apartments up to 60 m². Rental prices have also climbed, and further growth is still expected. Despite the rising prices of apartments and mortgages, people's interest in buying their own homes has not diminished.

Buying real estate

The asking prices of apartments in older buildings rose by tens of percent year-on-year. They grew significantly in all regional capitals, but most notably in Ústí nad Labem, where prices rose by up to three-fifths due to demand for the cheapest housing. The price rose from around CZK 30,000/m² to CZK 47,000/m². A year ago, an average 40 m² two-room apartment could be bought for around CZK 1.2 million, but this year it costs almost CZK 1.9 million. According to the text, rental prices here have not changed much so far, which is surprising.

After Ústí nad Labem, prices for smaller apartments rose fastest in České Budějovice (by almost half) and then in Karlovy Vary, Hradec Králové, Jihlava, Ostrava, Pardubice, and Olomouc. The smallest increase was recorded in Prague, where prices did not rise by even a fifth. Nevertheless, Prague remains the most expensive place to live in Czechia, with an average price of CZK 131,500/m². The second most expensive city is Brno, where prices of smaller apartments rose by a quarter and cost over CZK 110,000 per m². Hradec Králové ranked third, followed closely by České Budějovice.

Prices for larger apartments around 80 m² grew fastest again in Ústí nad Labem, but more slowly than for smaller apartments. For an 80 m² apartment, people here must be prepared to pay approximately CZK 3.2 million.

For smaller apartments, the price per m² in the same locations is often higher than for larger apartments. In České Budějovice, for example, a m² in a 2+1 apartment can be more expensive than in a 3+1 apartment. The difference in the total price can then be relatively small (approximately CZK 200,000 to CZK 400,000). Similar differences can be found in Prague, Brno, and Hradec Králové.

A significant drop in apartment prices is not expected in the near future. There is still a significant group of cash buyers on the market who are willing to purchase investment apartments, which keeps prices stable and gradually pushes them upward. A return of around 5-6% is usually required for an investment, but this can be reduced by energy prices and high mortgage rates. Therefore, some investors may try to sell the property before the end of the mortgage fixed period if the rent no longer covers the repayment.

According to the text, the share of investors buying for cash is expected to be about 20% higher than the share of those financing their purchase with a loan. It is precisely investors with cash who can continue to support price growth, as they invest in a stable asset that is expected to retain its value even in the face of inflation.

Rental prices

Rental prices also rose in the first quarter, but at a slower pace than property purchase prices. Prices rose by up to 15% in České Budějovice, Prague, and Brno. Even before the war, rents were expected to rise significantly, and the war has accelerated this trend. While growth of around 5% was previously expected, estimates are now shifting towards a possible increase of around 30%.

Given the rise in real estate prices and mortgage interest rates, it is likely that more people will opt for rental housing, as buying their own home is becoming unaffordable for many households.