Prague property prices reflect soaring expat demand

if you’re planning a start-up in Prague, the bad news is that property prices in the Czech Republic have risen by 32 per cent since 2010.

The massive rise in the cost of homes in the Czech Republic is the second-highest in the whole of Europe, and is set to keep on soaring whilst the flood of expats keeps coming. Only Ireland’s house price rises beat those in the republic at 33 per cent over the same period of time. The increase seems to be confined to the Czech Republic as its near neighbours’ increases are less dramatic, with Austria and Slovakia seeing 20 per cent rises, Germany seeing 18 per cent increases and Poland’s housing costs up by just 13 per cent.

One of the major reasons for the real estate boom in the republic is the state’s chronic shortage of new developments coming onto the market combined with the huge increase in expat arrivals over the past several years. Locals are now priced out of the market and moving to less expensive areas, and expats as well as Czech buy-to-let property investors are doing very well via AirBnB and aren’t about to give up on a steady income stream from new arrivals.

As most Czechs prefer to own their own homes rather than renting, the numbers of properties on the market are far fewer than the demand, thus pushing up prices due to scarcity. Almost 80 per cent of Czech citizens own their own homes, with only around 21 per cent in the rental market. The influx of expats has destabilised the real estate market still further, and low mortgage interest rates have also encouraged the trend towards local housing as a longer-term investment via rentals and capital appreciation.