Currently, the average monthly mortgage payment for an average 53-square-metre flat is half the average monthly rent. This was stated by the Association of Rental Housing (ANB) in its report. According to the association, renting is more economically advantageous than owning a home. However, the difference between mortgage payments and rent is decreasing. According to the association, the current average difference is CZK 7,768, while in 2022 it was around CZK 10,000. An earlier survey by the Academy of Sciences of the Czech Republic shows that most Czechs prefer to live in their own home anyway, and renting is not an alternative in their opinion.
“Compared to owning a home, rented housing is currently putting significantly less of a burden on domestic budgets and can be said to be paying off across the Czech Republic. We believe that the trend is long-term and that the strengthening of rented housing will continue even after interest rates on mortgages fall,” said Jan Rafaj, a member of the ANB presidium.
The association estimates that thanks to the trend, around a quarter of people in the Czech Republic will be living in rented accommodation in 2030. The number of so-called institutional landlords operating hundreds or thousands of apartments is expected to grow even faster. According to Zuzana Chudoba, the owner of BTR Consulting and a member of ANB’s board, there are, for example, 2,326 rental apartments in institutionally managed new buildings on the Prague market. “Our research shows that by 2030 there will be around 10,000 such professionally managed apartments, five times more,” Chudoba said.
Although rental housing offers greater flexibility, for example, the downside, according to ANB vice president Jakub Vysocki, may be that it creates no property value, but subtenants are investing in someone else’s. The fact that the tenant cannot influence the amount of rent, and therefore does not have a fixed amount to pay in the coming years, also speaks against rental housing. Institutionalised rental housing nowadays includes services, which are then written into the final rental prices.
The August data from BTR Consulting, when compared with data from the consultancy Deloitte, shows that the average rent in a fully furnished apartment in Prague’s BTR is CZK 534 per square metre. Although it also includes utilities and services, it is on average almost CZK 150 per square metre more expensive than the average for traditional rental apartments. The current vacancy rate of such apartments on offer is 28 percent and three-quarters of the tenants are Czechs.
According to a survey conducted by the Institute of Sociology of the Czech Academy of Sciences, which involved 2019 respondents over the age of 18, 94 percent of people do not consider rental housing an alternative and 92 percent think it is best to spend their savings on their own housing. Two-thirds of young people think housing is less affordable than for their parents’ generation. People over 60 mainly blame the state for unaffordability, while younger generations cite rising land and construction prices and speculation on the market.
ANB was founded in 2020 and brings together 11 residential landlords in the Czech Republic who own over 55,000 rental apartments in the country.
Source: Reuters and CTK
