The Covid-19 pandemic measures have forced a big decline in rent prices in Prague. This is due to a few factors, namely because of a lack of tourism, and an absence of university students.
In pre-lockdown times, thousands of university students were usually expected at the end of summer to come looking for accommodation, but distance-learning has been obliged by governments globally, eradicating the need for students to show up physically.
A significant decrease has been documented since August 2020, substantially peaking around that time when it was clear that universities were not going to be open again, and that learning would stay online. Rent prices have been decreasing since then, affecting all parts of Prague.
Notably, Prague 1 encountered a huge decrease of 11.5% during August of last year, followed by Prague 7, with a documented decrease of 5.8%. The estimated rent price for 1+KK dropped by 12%, at about 11,000 CZK since December 2020.
On the other hand, 3+KK apartment rents plunged to a decrease of 14.6%.
What this has come to signify for the market, is a decline in short-term rentals. Mainly correlated with the fact that there aren’t enough tourists to rent out flats for a short-term period. A large number of smaller apartments which were mainly rented out on Airbnb, for example, have switched to long-term rentals.
Petr Hlaváček, Prague Deputy Mayor and responsible for territorial development, said that “not all of the apartments for short-term rentals are adapted for standard use”.
Generally, there are more flats available for long-term rental now, with a documented 97.7% increase (14,738 in comparison to 7,453 in 2019), at the end of the second quarter of 2020.
This is an unprecedented number of available long-term flats in the last four years.
House prices, on the other hand, are unlikely to fall in the foreseeable future, again especially in Prague. According to analysts at Deloitte, developers would rather reduce supply than sell at a loss.
And with ever-increasing demand, as well as a combination of slow-building permits, rising prices of land, construction work, and materials spiking costs, the point of breaking even and thus sale is also continuously rising.