The Czech Republic is among the countries with the lowest share of rental housing in the EU. According to the statistical office of the EU (Eurostat), home ownership still dominates the market with a share of 78%, while rental housing only has 22% . Meanwhile, in the neighbouring countries (Germany, Austria) the share of rental housing is roughly double . The interest in rental housing in the Czech Republic, however, is expected to increase significantly this year, following the current trends in the neighbouring countries, explains Peter Noack, CEO of Zeitgeist Asset Management. Zeitgeist is a Real Estate Developer and Asset Manager for private and institutional investors in the CR, Germany, Poland and Hungary. In Prague, it is currently planning to create a portfolio for 500 rental flats in various localities and with a range of different standards. At the same time, it is bringing a new standard of student housing in modern reconstructed buildings to Prague and, following its success in the CR, it is preparing the same model in Poland, specifically in Warsaw.
The more expensive the flats, the greater the interest in rental housing
Even though living in your own flat is very popular and underscores the social position of the owner, many Czechs will have to forego this in the coming years. The prices of new flats in the capital city have, in many cases, surpassed the magic threshold of CZK 100 000 per square metre, and thus rental housing will be the most popular alternative to ownership. Just consider, that you have to be prepared to pay an equivalent of almost 17 net average annual salaries, in order to purchase a flat in Prague with the most popular size of two rooms and a kitchenette and approximately 60 sqm,” stated Peter Noack. According to the 2018 Property Index study from Deloitte consulting company, which analysed the residential markets in 12 European countries, Czechs have to save the longest of all the compared countries for new housing – longer than the citizens of Great Britain, France or Germany, for example.
Germany: rental housing – quite common in cities
Unlike the Czech Republic, people in neighbouring Germany see rental housing as something completely natural. The share of ownership here is currently 46% and less than 30% in all larger cities. According to data from Zeitgeist Asset Management, it is only a mere 15% in the capital city of Berlin. “Today there is great interest in rental housing in the German cities. Thus, the tenants usually have to submit documentation of their income and a confirmation of solvency to the landlord. When there are more people looking to rent a flat, a reference from a previous landlord is an advantage. Another detriment to ownership in Germany is that the fees connected with the purchase of property are relatively high (the property transfer tax plus notary fees can total up to 15% of the price including taxes),” pointed out Peter Noack.
Poland: prices of rent comparable to Germany
Most of the inhabitants in Poland prefer living in their own flat, with their share rising by roughly a fifth in the last ten years. Thus, more than 83% of Poles live in their own house or flat. “In addition to the historical experience with the expropriation of property during the Communist period, this trend is currently also influenced by the high rents, which are comparable to Germany,” commented Peter Noack.
Hungary: share of ownership is high, but dropping
In comparison with the Czech Republic, Poland and Germany, the share of those who live in their own flat is highest in Hungary (exceeding 85%), but it has constantly decreased since 2012, when the share of ownership hit its peak (around 90%). “In Hungary rental housing is most often used by people aged 18-35 as well as those who frequently move because of their work,” concluded Peter Noack.
