Sales prices for flats in Prague grew by 12.5 percent on average per year, with some key neighbourhoods showing growth of up to 35 percent. Outside the capital, the city with the highest price growth in the country was Ostrava, where the lift on an average price per square metre exceeded 23 percent per year, in total 46 percent within the past two years. The Czech market benefited from continuingly favourable mortgage conditions which led to nearly a 22 percent year on year uplift in the number of mortgages issued. Consumer confidence in the economy, a rise in earnings and a continued lack of supply contributed to the increase.

Approximately 43,000 dwellings were started in 2007. The number of housing units completed was 41,650, 38 percent more than in 2006, but still below the government’s current estimation that states 52,000 units are needed yearly to satisfy demand. The most active region in terms of construction was Stredocesky kraj and traditionally Prague, Brno and Ostrava were leaders within cities.

A growing number of residential funds and the rising demand of investment buyers have led to an increase of projects suited to local and international buy-to-let investors. Generally, investors are accepting gross rental yields around five percent on average. We can expect rents in Prague to grow by five to ten percent in the next year. With credit issues striking key markets abroad, developers, lenders and buyers are keeping a keen eye on key local market indicators to see if the Czech Republic will suffer from a damaging ripple effect. However, the general view is that with the blend of strong economic and lending conditions in place, the market should stay strong and decrease only by an average of 10-15 percent in 2009.

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Residential sales prices (location/m²)
City centre (Malá strana, Old town) 3,125 – 10,550
Residential VIP (Vinohrady, Dejvice) 2,200 – 3,125
Traditional residential districts (Žižkov, Trója, Karlín) 1,640 – 2,400
Outer districts (Barandov, Bohnice, Prosek) 1,380 – 1,900
Regional cities (Brno, Plzen, Olomouc) 1,000 – 1,680

Prices as of December 2007
(source: King Sturge, March 2008. The significant uplift in prices in EUR is also influenced by the appreciation of the Czech crown. April 2008: YOY appreciation 10.9 percent. Prime residential rents – Prague. Location €/m²)
City centre (Malá strana, Old town ) 13 – 22
Residential VIP (Vinohrady, Dejvice) 12 – 20
Traditional residential districts (Zizkov, Trója, Karlín) 10 – 18
Outer districts (Barandov, Bohnice, Prosek) 5 – 12
Regional Cities (Brno, Plzen, Olomouc) 5 – 11