Czech real estate market strengthened by more than a third
House prices up 10.7%
Prague, 26 February 2025 - The real estate market in the Czech Republic continued to grow strongly last year. Overall, property sales grew by a strong 34% percent. New-buildings even increased by 51 per cent. The market is thus continuing its relatively rapid return to pre-crisis values after a very strong growth in activity in 2023. House prices rose by 10.7 per cent on average nationwide. The mortgage market also strengthened significantly, by 83 per cent. Interest in housing loans thus supported the high activity in the property market. This is according to statistics from the Czech Banking Association and Flat Zone. A regional comparison shows that the poorer housing affordability in the Czech Republic is not only a matter of property prices, but also of lower household wage growth.
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Property prices rose, most significantly in Prague
After a drop in prices between 2022 and 2023, prices of flats and houses rose quite significantly last year. On average, prices rose by 10.7 percent. For older housing developments, the value rose by 10 per cent nationally, with the same rate of growth in the regions, and in Prague it rose by 18 per cent year-on-year. Brick houses retained a significantly higher value per square metre compared to prefabricated houses. Prices of new-builds rose more slowly - by an average of 8%, and by 9% in the capital. Family houses maintained almost the same value in the regions and nationally, but rose by 15% in Prague.
Prague and the Central Bohemian Region drive real estate market activity
Overall, property sales rose by a significant 34 per cent and are continuing to return to normal values before a sharp drop in the second half of 2022. The largest sales are in new-builds, which increased by 51 per cent year-on-year. At the end of the year, there were also over 16,000 vacant flats in new buildings under construction across the Czech Republic. Older housing developments gained 24 per cent and detached houses 37 per cent. The largest shares of sales have been taking place in Prague and the Central Bohemian Region for a long time. For older flats, these two regions account for 39 per cent of all transactions, and for new flats even 60 per cent of all sales.
"Throughout most of 2024, we saw continued growth in sales activity, across all segments. In the case of new homes, we even saw the second highest number of homes sold in the last 15 years. Demand has long outstripped supply the most in the capital, Brno and the Central Bohemian Region. There is still a situation where the construction of new flats is completely inadequate in the places with the highest demand and where the price increase is the highest. Although the dynamics of price increases was lower than in the years before the last crisis in 2022, the price increase, especially for old prefabricated flats, is unjustifiably high compared to the prices of new flats. Prague, Brno, the Central Bohemia Region and regional cities have been pulling up prices for a long time.In Prague, the prices of older flats are still 4 times higher than in the Ústí nad Labem or Karlovy Vary regions," says Milan Roček, managing director of Flat Zone.
Revival of the mortgage market
According to the CBA Hypomonitor statistics, there was a strong growth in the volume of new mortgages without refinancing in 2024 (+83% year-on-year). However, this growth also reflects two weak previous years. Their dynamics in recent months suggest a possible 17% growth in new mortgages in 2025. This would slightly boost the credit impulse from mortgages to the economy to around 2.9% of GDP, although this would still remain below the 3.3% average of 2016-2020. Despite the rebound in new mortgages, the number of new mortgages in 2024 would remain about a quarter below the 2020 level. In contrast, the average mortgage amount in 2024 rose by a third from 2020, reaching £3.92m at the start of 2024. CZK. Related to this is the continued growth in monthly mortgage repayments despite the average mortgage rate on new mortgages falling below 4.8% in early 2025.
Non-performing loans
The proportion of non-performing mortgage loans with repayment problems rises by 3% in 2024 but remains very low, at around 0.6% vs. the long-term average of 1.7%). For the wider aggregate of housing loans, the ratio is marginally higher at 0.7% vs. the long-term average of 2%. Both figures are well below the former highs of around 3.3% from 2011-2013.
"Housing affordability in the Czech Republic continues to face problems due to high property prices, slow completion of new apartments and rising mortgage payments.I would add to these the underdeveloped capital market and slow growth in the economy's potential, which is reflected in low growth in the disposable income of the population - the slowest in the region last year," says Jaromír Šindel, chief economist at the Czech Banking Association.
Housing affordability in the Czech Republic - still 20,000 flats below the long-term average
Despite slightly above average housing starts in the Czech Republic in 2024 and more in Prague and the Central Bohemian Region, the number of completed apartments remains below the long-term average. This creates a cumulative deficit of over twenty thousand dwellings compared to the long-term average, half of which is the case in Prague and the Central Bohemian Region.
House prices are rising faster than incomes
Comparable data on house prices point to a 124% increase in house prices compared to 2015. Across the region, price growth was the second fastest in the EU between 2020 and 2022, but only the fifth fastest in 2024. However, house prices are again rising faster than the disposable incomes of Czech households, again exacerbating the imbalance between housing affordability and the financial capabilities of residents. Compared to 2015, house prices have outpaced residents' income by 24%. Available figures for 2024 indicate a further increase in this disparity of 2.4% in the first three quarters. This reflects a 3% increase in per capita disposable income, which has been weaker relative to wage growth. The growth in rents in 2023 has reduced the ratio between house prices and rents. However, this ratio remains the second highest in the regional comparison after Hungary.
Comparison of housing affordability in the region (Czech Republic vs. other Visegrad and EU countries)
1. Rising house prices in the region:
- The Czech Republic recorded the second highest house price growth in the region between 2015 and 2024Q3 (+124%).
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- Slovakia : +84%
- Poland: +109%
- Hungary: +209% (highest growth in the region)
- EU average: +54%
Impact:
The Czech Republic is one of the countries where house prices have risen significantly faster than in the EU, negatively affecting housing affordability.
2. House price to income ratio:
- The imbalance between house price and income growth in the Czech Republic persists.
- Between 2015-2024:
-House prices have increased by 123% .
- Household incomes grew by only 83%
- Prices relative to income increased by 24%
Comparison:
In the region, price growth has been more moderate relative to incomes, meaning less negative impact on housing affordability.
3. New housing construction:
- There has been a long-term shortage of completed housing in the country.
- Between 2010-2024, the cumulative deficit in Prague and the Central Bohemian Region is:
-Housing starts: -15.2 thousand below the long-term average.
- Completed dwellings: -11.2 thousand below the long-term average.