Prague, as a tourist destination, remains one of the most affordable and easily accessible cities. However, in the ranking of the world's most expensive cities, its price is rapidly rising. Over the course of a year, Prague has climbed from a hypothetical 121st position to 110th.
Aware of its own price, housing quickly becomes expensive, especially for its own residents, more so than for tourists. In the twelve years since the revolution, the cost of housing for families has doubled. Twelve years ago, these housing expenses represented 9,7% of a family's total expenses, and last year they approached 20%. At the same time, housing prices rose by almost 10% in 2001, double the inflation rate. It is estimated that apartment prices will increase by up to 20% in the coming years, with building plot prices also rising. As for building plots, their price increase is estimated at around 7-8%, with the expectation that in the long term, prices will rise faster than inflation. Therefore, we return to the idea that "the sooner you buy, the better."
The real estate market in the Czech Republic is young and very active. There are many real estate agencies. In 2001, properties once again became a focus of investor interest, and this trend toward market recovery is expected to continue this year. The greatest supply and demand are concentrated in the Prague area. The most lucrative properties are modern business and administrative centers or shopping centers in desirable locations. Prague city center remains the most sought-after, although companies are frequently relocating from older buildings to more modern and better-equipped complexes that offer improved technical, technological, and security features. In Prague city center, office space rents range from €18 to €20 per square meter, while outside the city center they range from €12 to €16 per square meter. Outside Prague, rents are significantly lower.
The same applies to land prices. In economically attractive areas and large cities, prices rise. In Prague, until 1990, the price per square meter was around 62 euros; in the second most expensive location, the Central Bohemian region, it was 883 crowns (approximately 27,5 euros). In several regions, the price can drop to as low as 200 crowns.
The land market represents a special chapter. Interest in comparing housing prices is enormous throughout the Czech Republic. The greatest demand is for small apartments, with one or two bedrooms. And precisely these types of homes are the least available on the open market. While in European Union countries housing construction accounts for 40% of the total and in the United States even 46%, in the Czech Republic only 15% is dedicated to housing—that is, only half the amount needed to meet demand. Nevertheless, the government believes there is enough land and that it would simply require better management. This implies the existence of a black market, which artificially creates a housing crisis in the country, where there are more than 500.000 permanently vacant apartments, representing 14,4% of the total housing stock. One measure that would prevent this black market would be regulated rentals, which would make it more difficult to illegally rent out state-owned or communal housing. The tenant who acquired the communal apartment for free, illegally rents it out profitably for a higher sum.
The failure of politicians in past years to create a fully functioning housing market has led more than half of Czechs, especially young people, to turn to the black market, seeking to resolve their housing problems illegally. Fifty-three percent of young people live in small apartments with a maximum of two rooms. Subleting an apartment of this size in Prague costs around 12.000 crowns (about 375 euros). In newer buildings, the price of a small apartment in Prague can double. The benchmark price per square meter in Prague is around 30.000 crowns (1.155 euros), but in the Old Town, it can reach 120.000 crowns (3.750 euros). Buying a detached house in Prague requires a sum of between 2 and 5 million crowns (62.000-156.000 euros).
"I have three houses in Prague; when I buy them, they'll be mine," goes a popular Czech song. Its ironic tone is even stronger now than when the song was written.
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