Housing in Prague is the least affordable in Europe

What are the reasons for that and are there any possible solutions for that problem?

Housing prices – they just keep on surging across major European cities, but according to a study published by Politico at the end of last year, Prague residents have it the worst. People working in the Czech capital who would like to buy a 75 m² flat there would have to prepare 25.3 annual salaries to afford that property.

In that respect, Prague ranked as the most unaffordable city for housing purchases and investment in the continent. By the way, Bratislava came second with the same size flat worth 23.8 annual salaries. What’s up with this, former Czechoslovakia?

Getting worse before it gets better

According to further analysis done by Czech housing associations, and cited by Expats.cz, this has been a deepening trend in the preceding years. Reportedly, the prices of apartments have surged by 50% over the past years, and by 120% since 2010, according to the Politico study. Likewise, rents have followed suit jumping by 30% in the preceding half-decade period.

And here lies one of the major reasons behind the lack of affordability – the rise of wages has not been nearly as high to catch up. Czech salaries have only been raised by 21% in nominal terms.

What’s more, the situation will likely worsen this year – although mortgage rates have been declining since the end of 2023, analysts believe that this will spur interest in buying property and, therefore, elevate asking prices by about 5 percent.

Other factors that have been noted were the regular high demand for properties that is a feature of major cities and capitals, as well as the energy crisis.

The Czech associations' analysis offers some solutions though. One thing local policymakers could do is make the expansion of Prague's public housing a priority. It currently accounts for only 5% of housing stock.

Another recommendation is introducing progressive taxation on large property owners to curb speculation-driven price hikes.