Acquiring an apartment last year cost a Czech 13.3 times their annual salary, the highest in Europe

Prague – The purchase of a 70 m² apartment last year cost Czech citizens 13.3 times the average gross annual salary. After an increase of 1.1 average salaries since 2020, the Czech Republic ranks as the country with the least affordable home ownership in Europe. Slovakia ranks second to last, where citizens spend 12.8 times the average gross annual salary on such an apartment, according to the results of the Deloitte Property Index 2022, which is available to ČTK.

“In comparison with selected European capitals, only Amsterdam is in a worse position than Prague, where acquiring home ownership costs 15.3 times the average gross annual salary. The Dutch spend 17.7 times the average salary for apartments in their capital. The least such salaries, at 6.8, are required for housing in Oslo,” stated managing partner Miroslav Linhart.

The average transaction price of new apartments increased in 18 out of 21 analyzed countries. The most intense increase was recorded in Hungary, at 24 percent. In the Czech Republic, the increase was 14.4 percent, making it the fourth highest. There was a decline in Latvia (minus 1.3 percent), Slovenia (minus 3.8 percent), and Spain (minus 8.5 percent). The average transaction price of new apartments in the Czech Republic for the past year is 3,342 euros (81,929 CZK) per m². The highest is in Great Britain, at 4,905 euros/m², and the lowest in Bosnia and Herzegovina, at 974 euros/m².

The most expensive city is again Paris, where the transaction price of new apartments hovers around 13,500 euros/m² (330,952 CZK). High average transaction prices are also found in Munich, London, Oslo, Frankfurt, and Amsterdam. The lowest average transaction prices are offered by Varna (885 euros/m²) and Burgas (900 euros/m²) in Bulgaria. The largest year-on-year price growth was recorded in Košice, at 38.2 percent. Brno also saw significant growth at 22.4 percent, and in Prague, the average transaction price for a new apartment increased by 20.1 percent, noted real estate market expert Petr Hána.

When comparing cities to their national average, Lisbon shows the largest difference in the average transaction price of a new apartment, at over 300 percent. The lowest prices against their national average are found in Ostrava, where a new apartment can be purchased for 58 percent of the average price across the entire republic. Looking at capital cities in Central and Eastern Europe, it is evident that transaction price levels are 20 to 40 percent higher than the national average.

After a slowdown caused by the economic downturn triggered by the pandemic, the European real estate market gained momentum, and property prices in most countries rose sharply. "A key feature of the Czech real estate market has been the weak supply of properties. It is expected that property prices in the Czech Republic, as well as in most analyzed European states, will continue to rise, although at a slightly slower pace in the next year,” estimated Jakub Leško from the real estate team.

High property prices favor rental housing. The most expensive rent is in Paris, averaging 29.1 euros/m² (713.4 CZK) per month. Tenants in Oslo, London, Amsterdam, Trondheim, Barcelona, Copenhagen, Ljubljana, and Bergen also pay above 20 euros/m². In Central Europe, the highest average rent is in Warsaw (17.9 euros/m²). This is followed by Bratislava, where the price of 11.6 euros/m² exceeds Prague's 11.3 euros/m² (277 CZK). Monthly rent in Brno is 10.1 euros/m² (247.6 CZK) and in Ostrava 6.8 euros/m² (166.7 CZK). Of the cities represented, only Brașov in Romania, Celje in Slovenia, and the Bulgarian cities of Sofia, Varna, and Burgas offer lower rents.

Over the past year, 34,200 apartments have been completed in the Czech Republic. This translates to 3.25 apartments per 1,000 inhabitants. The largest ratio of completed apartments to the number of inhabitants was in France, at 6.95 apartments per 1,000 inhabitants. The 471,000 built apartments also mean that France built the most of all analyzed countries. Bosnia and Herzegovina constructed the least new apartments, both in total and per capita, with only 2,600, which is 0.8 apartments per 1,000 inhabitants.

The study also included mortgages and their average interest rates. Similar to previous editions of the Property Index, the most indebted households regarding mortgages were in the countries of Western and Northern Europe, specifically the Netherlands, Norway, and Denmark. The highest average mortgage interest rate in 2021 was in Poland (4.7 percent). The lowest interest rate, 0.8 percent, was recorded in Portugal. The average interest rate in the Czech Republic was the fourth highest, at 3.0 percent, alongside Romania.