Rental rates in the Czech Republic are growing rapidly due to the lack of apartments. The cost of rental housing over the past five years has increased by 42%. More and more people began to rent apartments in the Czech Republic. A sharp rise in housing prices in recent years, combined with tightening mortgage lending conditions has been led to the present situation. A study by KPMG consultants showed that the number of rental properties on the market increased by a third in just two years.
Over the past five years, prices for new apartments in Prague have increased by 80%, and rents – by 42%. Experts believe that growth will continue, they also note that rents in Prague have increased by about 10% over the past six months of 2019.
What are the reasons?
Among the possible reasons that provoked such a desperate situation to happen, can be specified the following:
- Realtors say that this trend is associated with a decrease in the number of new apartments that are being completed and enter the market. In the second quarter of 2019, sales of new buildings in the Czech Republic capital decreased by 16% year on year.
- Prices are also rising in other major cities such as Brno, Ostrava, Olomouc, Ceske Budejovice, and Pilsen. Rent began to rise rapidly three years ago amid rising prices for the purchase of the real estate. Prior to that, it had stagnated for more than a decade.
- Airbnb and short-term rental, which bring owners higher incomes than long-term contracts, have a significant impact on apartment prices in Prague. Developers say that about a third of new properties acquired in 2016 and 2017 were focused on investments. In Prague, real estate agents offer about 1,000 apartments, but many more properties are leased through Airbnb in these areas.
A possible solution to the problem
The authorities of major Czech cities are concerned that, due to current trends, local residents will be forced out of the real estate market. Including people working in such important professions as teaching, healthcare, police, and firemen. Therefore, more and more city halls plan to invest in municipal housing. Brno, for example, wants to build or renovate more than 2000 apartments in the next five years. Prague and Ostrava will also build hundreds of new liquid objects.