Saturday, 15 March 2025
The gap between mortgage payments and rents in the Czech Republic has narrowed in recent months, making rental housing a more viable financial option. In some regions with lower housing demand, taking out a mortgage has become increasingly cost-effective. Experts note that homeownership offers long-term security and wealth accumulation, particularly for retirement, whereas renting provides greater flexibility.
According to data from Banky.cz and Hyponamíru.cz, in 2020, the average monthly mortgage payment in the Czech Republic was CZK 10,567, compared to CZK 12,817 for rent. The biggest discrepancy between renting and mortgage payments occurred in August 2022, when the monthly cost of a mortgage for an average 52.6 square meter apartment exceeded rent by more than CZK 10,000.
Recent figures indicate a shift in affordability. In the Ústí Region, mortgage payments are now CZK 1,494 lower than rent. In the Central Bohemian and Moravian-Silesian Regions, rents remain CZK 2,000 cheaper than mortgages. However, in high-demand areas like the South Moravian Region, homeownership remains significantly more expensive. A 60 square meter apartment in this region costs approximately CZK 4.72 million. With 20% savings of CZK 944,484 and a mortgage of CZK 3.78 million, the monthly installment reaches CZK 21,603, compared to a rental price of CZK 15,300 per month.
Interest rates have declined by 1.2 percentage points over the past two years, currently standing at 4.78%, with further reductions expected. House price growth has slowed, bringing the housing market closer to equilibrium. However, rental prices continue to rise, increasing six to seven percent annually, a trend that is expected to accelerate in 2025, according to Miroslav Majer, Executive Director of Hyponamíru.cz.
Despite these trends, Jakub Vysocký, President of the Association of Rental Housing (ANB) and owner of SIAN, disagrees that mortgages have become more attractive than renting. He notes that the average mortgage payment rose six percent year-on-year in the third quarter of 2024. By the end of 2025, mortgage interest rates are projected to be around four percent, while housing prices are expected to rise by at least ten percent.
According to the Swiss Life Hypoindex, the average mortgage rate declined slightly in early February 2025, dropping by 0.02 percentage points to 5.11%, the lowest level since spring 2022. At this rate, the monthly payment for a CZK 3.5 million mortgage (covering 80% of a property’s value) with a 25-year maturity is CZK 20,692, approximately CZK 1,000 less year-on-year.
An analysis by UlovDomov.cz revealed that rental prices increased by seven percent year-on-year, averaging CZK 16,473 per month in the fourth quarter of 2024. While the costs of homeownership and renting continue to converge, the financial advantages of each option remain dependent on location, market conditions, and individual preferences.
Source: CTK
