What is driving the Czech property market, where is it worth investing in property, and what affects the rental housing market? We bring you the latest developments from the property world.
Tensions surrounding Iran could make mortgages more expensive. Rates could rise to 6%
Geopolitical tensions surrounding Iran could make mortgages more expensive in the Czech Republic. Banks' funding costs for financing mortgages are rising sharply. While the average mortgage rate in the Czech Republic is currently around 4.9%, when bank funding costs were similarly high in the past, it reached approximately 6.3%, so mortgage rates could rise relatively quickly. Long-term interest rates are also increasing across the economy. The yield on ten-year Czech government bonds has exceeded 5%, reaching its highest level in the past three years.
The rise in rates is due to tensions in the Middle East and investors' concerns about higher inflation. Expectations regarding the development of Czech National Bank rates have also changed. The base rate is currently 3.5%, but could rise to 4.25–4.5% during the year. Before the attack on Iran, rates were expected to remain unchanged this year. Higher rates should help curb inflation, which could rise again due to more expensive energy.
Source: Lukáš Kovanda, Ph.D.
Prefabricated flats are rising in price faster than new builds
Prefabricated flats are becoming an investment hit on the Czech property market. According to data from Flat Zone, their prices rose by 19% in 2025 to an average of CZK 70,987 per square metre, while new-build prices increased by 9%. “In my view, the price of a prefabricated flat is already inflated,” says Milan Roček, managing director of Flat Zone. According to him, prices of older properties are rising disproportionately quickly compared with new construction. The main reasons are the slow pace of construction and the shortage of new flats on the market.
Older properties were not built to current technological standards or regulations, and their prices are not burdened by today’s construction labour and material costs. Prices of prefabricated flats are therefore largely just a consequence of high new-build prices, which they have simply followed. Roček also highlights the issue of their lifespan: originally estimated at around thirty years, it was later extended to fifty years. “Today, we see prefabricated buildings as having the lifespan of Charles Bridge,” he adds. In his view, investing in a prefabricated flat is therefore not an ideal choice.
Source: Flat Zone, DVTV