Prague flats getting out of reach of most people

High prices and new mortgage rules will make it harder to buy an apartment

Buying a flat is getting out of reach of many people in Prague. High prices plus new rules by the Czech National Bank (ČNB) mean many people will have a hard time getting a mortgage.

A person with an average monthly wage in Prague would have to put aside their gross monthly income for almost 15 years to buy a flat at the average prices, according to weekly Ekonom.

The second largest disparity between household incomes and apartment prices is in Brno, where an average dwelling costs around 13 average annual gross salaries.

Housing prices in Prague and Brno have led some people moving to adjacent areas, which has been pushing up prices there as well. In the Prague-West (Praha-západ) and Prague-East (Praha-východ) districts, the average apartment is about 11 times the average annual Central Bohemia wage.

Housing around in the area surrounding Brno is nine times the local average annual wage.

But that is not the case for the entire country. In economically depressed areas such as Karviná, Děčín, Most, Sokolov, Ústí nad Labem or Chomutov, where an average apartment price is between 2.6 and 3.4 times the gross annual salary, according to Ekonom's analysis.

The ČNB has tightened the rules for mortgages so that as of October the maximum monthly mortgage repayment cannot exceed 45 percent of the applicant's net wage. The amount of the housing loan will be capped by nine times the net annual income.

Ekonom's analysis shows that mortgages will very difficult to get for people with average wages in Prague, Brno, Olomouc, Hradec Králové or Plzeň. The situation is better in Pardubice, Zlín, Uherské Hradiště and Mladá Boleslav. The figures are just a guideline, though, and are based on the prices of 2 + kk and 2 + 1 flats of 45 to 65 square meters, which have been the most popular according to developers.

Compared to last year, the cost of the cheapest available flats has increased in 81 of the 100 largest cities in the Czech Republic. In six municipalities, the price stagnated and it dropped slightly to 13. The highest growth in average housing prices can be seen in recent years in Prague.

Some of the highest growth rates in prices across the country have been seen in flats in paneláks, mostly because they started from the lowest price range and competition to find an affordable flat has pushed the prices up.

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