Affordability of Prague Flats Reasonable for Locals - Study
How do Prague property prices compare to those in other international cities?
This is a sponsored article provided by Czech Point 101.
A recent study by international real estate agency Gordon Rock compared the average income of residents of different cities around the world to the price of purchasing a 70 m2 flat in the same city. The results were surprising when compared with the situation in Prague and recent reports we have heard regarding a study from the Czech National Bank on Czech Republic property prices.
Here is a rough translation through Google Translate:
International real estate agency Gordon Rock to determine the number of years, which need to be worked by residents of large cities in the world and Russia to buy different types of apartments in the city. In accordance with research, the people of Berlin for the purchase of a model apartment will require only 3 years old, residents of large cities in the U.S. and Canada -- no more than 6 years old, residents of most European capitals -- from 7 to 14 years, residents of London, Paris, Rome, Tokyo, Sydney , Kiev, Moscow, St. Petersburg -- up to 20 years, and residents of Singapore -- an anti-record 36 years. Russian cities with million to purchase several types of apartments to be worked from 10 to 14 years, ie like most Europeans, and less than Moscow and St. Petersburg.
The methodology of research on data on average annual income of residents of the largest cities in the world and the Rosstat data on average wages in Russian cities. It is important to note that the calculation carried out for the average income of urban residents – ie for those whose profession can be attributed to working professions, services, education and servants. Consequently, the assessed value of such properties, which are in demand is for ordinary urban residents. As a model of the property in the study adopted a flat area of 70 square meters, which is located in the peripheral areas of the city and which can be arbitrarily assigned to the class of 'new development model'. Therefore, the cost per square meter in a particular town, used in the study, below the average cost per square meter, which significantly affects housing luxury and business class.
If we compare this to the figures in Prague, it shows that the real estate market in the Czech capital does not seem overpriced at this point. If we take 29,000 CZK as the average gross salary (Q1 2010 according to the Czech Statistical Office) for someone living in Prague and the average CZK/m2 for a 70 m2 "newish" flat on the periphery of the city (as per the survey) as 45,000 CZK a purchase price of 3,150,000 CZK (which is generous based on figures from iDnez.cz, realio.cz and bezrealitky.cz) it would take nine years to pay the property off.
One thing we don't know from the articles is whether the survey used gross or net salary. Even if we used net salary (roughly 23% less than 29,000 CZK/month) we get a payback time of 11.75 years.
In comparison to other European cities this puts Prague prices at a reasonable level and definitely not "unaffordable" for local citizens in comparison with other cities of the world, as local media reported the Czech National Bank claimed in a recent study. Perhaps when compared to historical averages this holds true but definitely not when compared to other cities of the world.
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