Property ladder too high for central Europe's first-time buyers
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Loading... - Honza Kohout
- 15 Jul 2022
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Meera Sankar knew it was time to give up her dream of buying a home in Prague when she looked at a flat barely big enough for one person but carrying a budget-busting price tag.
The 31-year-old's experience is a common one in Prague and other cities in central Europe where high prices, squeezed by acute supply shortages, have pushed home ownership out of reach for many potential first-time buyers. As the region's central banks now hike borrowing rates, the problem is getting worse.
"I decided to keep renting when I went to an apartment advertised as 60 (square) metres (646 sq. ft) but the apartment itself was only 20 metres and the rest was a garden," Sankar, a special effects producer in the film industry, said about the property priced at 4 million crowns ($189,081).
"There was barely enough space for one person and a few pieces of furniture. I spent two years actively looking for something but it is too expensive and not getting any cheaper."
Much has been made of eye-wateringly high house prices in western European cities such as London, Paris or Hamburg. But it is in central and eastern Europe where the disconnect between prices and local salaries - which on average are well below those in the west - is most acute.
The Czech Republic ranks as the least affordable housing market in Europe with an average of 12.2 gross annual salaries needed to buy a 70-square-metre apartment, according to Deloitte's housing affordability survey released in 2021.
This compares to six average salaries to purchase a property in Germany and 5.1 in Norway. Czech housing prices also rose 22% year-on-year in the third quarter of 2021, the fastest rise in the European Union for a second quarter in a row, according to Eurostat data. Read More...
