PRAGUE (AP) – The Czech Republic’s capital has the hottest residential property market in Europe, and it’s becoming a problem.
A 22 percent spike in prices over the past year is freezing out many locals from buying a home and the risk of a boom and bust in the market has forced the Czech Central Bank to step in to try to cool off demand.
While many countries in Europe have seen strong gains in real estate values recently, the Czech capital stands out, thanks to a combination of factors: a lack of new apartments, strong demand amid a growing economy and low borrowing rates, and a boom in investment buying to set up Airbnb businesses.
According to accounting firm Deloitte, the average price for newly built apartments in the capital reached some 92,600 koruna ($4,240) per square meter this year, up from 75,600 a year ago, a growth rate that the central bank says it higher than anywhere else in Europe.
Jan Blau, a 27-year-old barista, says it is partly pure luck that allowed him to buy a home this year with his girlfriend.