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Why is Property in Prague So Expensive?

Published: May 13, 2024

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Many people, especially investors and those considering buying a home, wonder why property prices in Prague are so high. Prague, being the capital and largest city of the Czech Republic, has a rich history and vibrant culture. It’s also a progressive metropolis offering comfortable, safe, and interesting living right in the heart of Europe. However, along with these advantages comes the high cost of housing, commercial properties, and consequently, land. Let’s explore the reasons influencing the rise in property prices in Prague and answer the question: why is real estate so expensive in this city?

Are Property Prices Really High in Czechia?

When comparing housing costs in Prague to other European capitals, property prices in this city are lower. For instance, compared to Lisbon, where the cost per square meter is over 5500 euros, Prague values a square meter at less than 5000 euros.

However, when considering only the Czech Republic, property prices in Prague are indeed higher compared to other equally popular cities.

Several reasons explain this:

Tourist Magnet: Prague is one of the most sought-after tourist destinations in the European Union. Additionally, it serves as the economic center of the Czech Republic, attracting many migrants from Eastern Europe.
Investor Attraction: The capital city is highly appealing to foreign investors and tourists. Many non-residents choose Prague for permanent residence or as an investment destination.
Historical Constraints: Prague is situated in a historically significant region with restrictions on new construction. Obtaining construction permits takes a long time, resulting in a limited number of new properties, thus increasing demand for existing housing.
Economic Growth: Czechia is experiencing economic growth, with Prague playing a key role. Business expansion and the creation of new job opportunities contribute to residents and expatriates aspiring to own property in the country.
Demographic Factors: Positive demographics and low mortgage interest rates contribute to increased demand for property in Prague, leading to price hikes.

Many investors see the potential for profitable investments in Prague’s real estate, expecting high returns in the future. Property prices in Czechia are expected to continue rising in the coming years. This is due to ongoing high demand for real estate in the capital, surpassing the available supply. Additionally, the city plans to develop its tourist infrastructure, further driving up property prices.

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