Prague’s housing deficit deepens as property prices accelerate

Prague’s housing shortage continues to worsen, despite a significant increase in the number of permitted flats last year. According to the Czech Statistical Office, a total of 8,191 flats were approved for construction in 2024, including 6,967 in apartment buildings. While this represents a 43% and 64% year-on-year increase, respectively, the rise is primarily attributed to the low comparison base of 2023 rather than a genuine acceleration in housing development.

Crucially, the number of permitted flats remains below the required 10,000 units per year—a threshold that has not been met since 2006. As a result, Prague’s housing deficit has grown to nearly 90,000 units over the past two decades, further straining affordability.

The persistent shortage of new housing is the primary driver of soaring property prices. Over the past decade, the price of new flats in Prague has surged by more than 160%. In 2024 alone, prices increased by 7%, exceeding expectations set at the beginning of the year.

The situation is exacerbated by record levels of demand, which is expected to intensify further as mortgage rates continue to decline. The Czech National Bank (CNB) may introduce additional rate cuts, further stimulating housing demand and price growth.

Despite the urgent need for housing, permitting delays and complications with the new building law and digitalization continue to hinder development. Without meaningful reforms, analysts predict that Prague’s housing prices will continue to rise by at least 5-10% annually in the coming years.

With no immediate solutions in sight, the housing crisis in Prague is set to persist, pushing affordability further out of reach for many residents.

Source: CENTRAL GROUP
Photo: calculation by Central Group, number of permitted flats in Prague according to the Czech Statistical Office