Czechs must come to terms with renting. Record-high flat prices mean they cannot afford owner-occupied housing

The property bubble has still not burst, and more and more Czechs are coming to terms with the fact that they will never be able to afford owner-occupied housing and will have to spend their lives in rented accommodation. Alongside them, the proportion of people who prefer living in a rented flat is growing due to persistently high property prices. This is a particular issue in Prague and larger cities, where housing-related costs are traditionally the highest.

“We are witnessing a growing trend in rental housing, which is and will continue to be on the rise in the future as virtually the only option. Those who want to live, for example, in the capital, Prague, realise that renting is essentially the only option and that there is no alternative. Rental housing is also a solution for those who have decided to wait and see how the overheated property market develops and whether flat prices fall. Or they may still need to decide what they want to do about their housing in the future,” comments David Novotný, owner and managing director of the real estate company Bohemian Estates International, on the current rental-housing trend.

In recent years, it has become clear that property prices have been steadily climbing to dizzying heights, and not even the pandemic crisis changed that. On the contrary, for many Czechs the coronavirus pandemic meant a significant blow to both their income and savings, so some had to abandon their ambitions of buying their own home.

“Flats are not primarily being bought by those who long for owner-occupied housing. During the crisis, many households have had to cope with a loss of income – if they depend solely on current income to make ends meet, the current situation generally pushes the prospect of buying a property even further out of reach. During the coronavirus crisis, demand for properties grew particularly among those with available funds or accumulated reserve capital who were looking for a suitable investment opportunity. They also benefit from still favourable mortgage rates and the abolition of property acquisition tax. Flats are therefore bought first and foremost by those wishing to invest, not by those looking to fulfil their dream of owning a home,” explains David Novotný of Bohemian Estates.

During a crisis, opportunities to trade in other commodities are also limited, or their price movements become less predictable and reliable. This contrasts with property, which offers investment security, returns of up to 7% per year with effective management, and rapid liquidity.