The sharp rise in apartment prices in major Czech cities in recent years combined with stricter mortgage conditions have led more people to rent, with a study by consultants KPMG quoted by Hospodářské noviny finding that the number of rental properties on the market has fallen by a third in only two years.

Photo: Polygon Homes via Foter.com / CC BY-NC

In the last five years, prices of new apartments in Prague have gone up by 80 percent while rents have climbed by 42 percent, meaning there is room for the latter to rise still further, Pavel Dolák of KMPG CR told the business daily on Thursday.

Kristýna Řezáčová of estate agents Re/Max told Hospodářské noviny that rents in Prague had increased by around 10 percent in the last six months.

Realtors say this trend is due to a fall in the number of new apartments being completed and going on the market. In the second quarter of this year new flat sales declined by 16 percent year on year in the Czech capital.

Prices are also shooting up in other major cities, such as Brno, Ostrava, Olomouc, České Budějovice and Plzeň, Hospodářské noviny said.

Rents began to rise fast three years ago on the back of an increase in property purchase prices. Before that rents had stagnated for over half a decade, according to estate agents.

Services such as Airbnb and short-term rentals – which deliver owners higher revenues than long-term tenants – are having a major impact on apartment prices in Prague, Hospodářské noviny wrote.

Developers say around a third of new properties purchased in 2016 and 2017 were for investment purposes.

Kristýna Řezáčová of Re/Max told the daily that Airbnb was making apartments to rent scarcer in the capital.

In Prague 1, 2 and 3 estate agents are offering around 1,000 apartments, but Airbnb is offering far more short-term accommodations in the same districts, she said.

Investors in Prague are most interested in purchasing apartments of up to 50 metres squared, Hospodářské noviny said. However, demand for bigger properties has also soared, Jan Martin of M&M reality told the newspaper.

The authorities in larger Czech cities are concerned that some locals will be priced out of the property market, including people working in such essential professions as teaching, health care, the police and the fire service.

More and more town halls are therefore planning to invest in municipal housing.

Brno, for instance, is planning to construct or renovate over 2,000 apartments in the next five years. Prague and Ostrava will also build hundreds.

At the same time, however, local politicians are aware of an increasing gap between market rents and rental prices in municipal-owned apartments and some cities have raised the latter, Hospodářské noviny said.