Why Is Housing in Prague so Expensive
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- čas přidán 4. 06. 2024
- i will never be able to afford a house lol
If you've looked at real estate prices recently, you might have noticed that they're absolutely insane. As a young adult myself, the prospect of owning my own home is… distant, to say the least. Housing crises are happening all over the world, but one city that's often overlooked is Prague, Czech Republic.
In this video, we'll explore the absolute state of housing affordability in the Czech capital city, why it's like this, and what could be done.
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#prague #housingcrisis #realestate
timestamps:
0:00 Intro
0:37 Low construction rates
5:02 Short-term rentals
6:24 NIMBYs
7:22 Potential solutions
9:54 Bloopers
Great video. I spent like an hour talking to my friend about how nice it would be owning some property, and than spend weekends building/renovating it. At the end we agreed, that owning a property it too unrealistic and although thinking about it is nice, it will never happend so it is time wasted.😂
haha, too real, unfortunately 🥲🥲
@@TheTramlylovely, thx.👍
At only 6500 units per year it wouldn't matter if every single one was being handed out for free. That's just not enough construction for a city the size of Prague. 6500 is only ~1000 more units than notoriously expensive and difficult to build in San Francisco, a much smaller city.
Absolutely, the rate of construction is just too low
I think cities should introduce a larger tax on properties and land.
In the main cities the property appreciation rate is higher than the property devaluation due to decay.
The quickest way would be to add an additional tax on property so that the additional tax and devaluation is higher than the property appreciation level and, therefore, a landlord would have to be sure that the apartments are rented out instead on staying empty for appreciation.
- - -
In my work I did for a while supervisory reviews of some Real Estate funds and there are mainly three types the first ones buy&rent buy existing property stock and rent out, for them a property tax would tip them in the direction of having their properties rented at all times. The second and third type buy and improve or develop from scratch, so they are fine. Maybe the only issue with the last two is that they tend to focus on the “premium” and “luxury “ side however from an “average homebuyer” perspective is nice to know that you will not have “premium” or “luxury” customers trying to outbid you for that shoe-box apartment close to your workplace.
The last thing I think should be a public housing policy that allows for the beneficiaries to allow for earlier payments so the owners get on hold quicker of your house.
Let’s say you get a productivity bonus at work why you should keep it in a current account and earning 0.001% and paying 5% on the outstanding mortgage debt.
That’s ridiculous.
a land value tax! absolutely, ensuring that land, especially in cities, is used productively, and not just as an investment vehicle for the wealthy, is, in my opinion, a good idea
@@TheTramlyThe issue with the tax is that the current major voting-base are the baby boomers and gen. Xs, so there is no way that will happen under democratic condition, just because the act would be extremely unpopular to the same voting base that is supposed to vote for that.
In that case if it would ever happen in democratic conditions would be probably in twenty years time when hopefully Gen.Ys and millennials would be seeking to become house owners.
The Issues is that the Y-Z generation might be double fucked, first because we will pay the higher housing cost compared to our income an when we will become, hopefully, house owners we will might incur in the new property tax.
I would rather avoid to discuss the "non democratic" condition.
Lived in Prague for two years between 2010-2012 and it was still relatively affordable by today's standards, but even back then I remember housing being quite expensive if you earned roughly the median salary. Can't imagine how bad it is now...
I do wonder though: is this also a problem in smaller cities? How is it in places like České Budějovice, Ostrava, Brno, or Olomouc? I live in the Netherlands now and our housing market is possibly even worse than in CZ. A lot of my friends (generally millennial, higher educated) are having to 'flee' to smaller municipalities outside of the large cities, as you can still get better bang for your buck there. Is there is similar trend going on in CZ too?
I don't really know much about the real estate market outside of Prague, so this is just my opinion
but I think that housing is still expensive outside of Prague, but definitely not as much as in the capital
and with the fleeing to satellite towns and villages, that's absolutely happening here
people are fleeing en masse to towns like Černošice, Úvaly, Říčany, etc.. (all of which are small towns outside of Prague, connected to the city via rail lines)
The insane amount of time it takes to get permits also impacts public transport projects, like the construction of Metro D, although it seems to not be affecting light rail (tram tracks) that much, seeing that in the past couple years, a new track to Libuš and Silvenec has been opened, with planned construction of Dvorecký Most.
Yeah, at least tram tram and Dvorecký most is coming along rather quickly
but with metro D, I think I'll make a video riding it when I'm 80, at this pace 💀💀
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Surprisingly nuanced video, I broadly agree with you, altough I think the fact that Airbnb can price out locals is just another symptom of not building enough housing, so fighting airbnb is like fighting demand, sure it might help, but bringing up supply is much more effective long term and leads to a more prosperous city, although some tourist taxes definitely make sense (I believe prague already has one)
I agree, and yes, Prague does have tourist taxes
Airbnb is against the law (if in regular apartment). However, in Prague it's very poorly enforced. Short term rentals wouldn't be so lucrative if laws were followed.
It's getting really bad, even people with pretty good salary have problem to pay housing. Living standard in Prague is not good now and actually people from villages and small cities have much better living standard, but they don't believe it when you say that, they believe that everyone in Prague has like 2000 eur/month, but in reality, they have very often even lower salaries then in villages, because the vast majority of Praguers do unqualified jobs like making fries in McDonnalds and such things. When you are for example experienced lathe operator or CNC programmer, you should get pretty good salary, problem is that pretty much all manufacturing was removed from Prague, so there is no work for you and what remained is occupied by people who really won't free that work place for you. So you move to village with some factory and you will have better salary than you would have in Prague.
And about office work places, you will not get there without really good contacts and they will not accept you if you are plebs from working family, they somehow recognize it even when you have education, you can speak English etc...they still identify you as plebs and they don't want you.
But to be honest, these office people are first who will be replaced by AI.
I really want to return to Prague, because it's my mother city and I absolutely hate village life, but when I speak with people who stayed in Prague, they really have worse salary than I have in village factory and they pay like 1000 eur/month for some terrible apartment, that's not acceptable.
On other hand, you will save a lot of money in Prague on moving around (public transportation is really cheap with year pass) and on shopping, because prices are much lower there than in small cities and villages.
Owning apartment or house in Prague (if you don't get it from your parents) is a sci-fi for everyone born after 1990. I will not be paying mortage for some little apartment for 50 years, I just deny that, better go for vacations and do what you want to do and then jump from bridge before pension age.
Another problem which is not mentioned that often is occupation of so-called expats who are moving to Prague because it's cheap for them and these people are increasing prices. Some parts of Prague are already almost fully English speaking and prices of shopping are crazy. This is common around those massive corporate office buildings becuase these corporations don't use local people, they use those "expats" or other "imported" people who are very often English speakers who work for western money, so places around these corpo-districts are not available for locals + there are a lot of "expats" who are doing some online stuff and don't even go to actual work, they are very damaging our housing and shopping prices and a lot of owners target them directly, you can see apartment offers in English etc...I am pretty sure owner will not even answer when you try to respond on that as a Czech.
And these expats are very confused, they for example pay 30 000 CZK for apartment (which is a scam, it's not normal Czech price) and they are happy about how cheap it is and this is a massive problem.
And with terrible bureaucracy and delays, there is no political party which wants to solve it, everyone is just adding more and more bureaucracy, I am really disaponted and when I travel to Poland, I am disapointed even more, because I see how they already overtook us in almost everything, we are starting to be very outdated country stucked in the past and we have no future.
I agree, Prague's manufacturing sector is largely gone now, and all that's just are low skilled service jobs, which pay jack shit, and high skilled service jobs, which pay well, but are extremely competitive
I really can't blame people for moving out into the suburbs and outer villages, when rent can easily make up 60% of someone's salary..
I agree as well, Prague's housing crisis is a maelstrom of different factors, all of which ensure that people born after 1990 (including yours truly🥲) will likely never own their homes
@@Pidalin It’s the same problem in Prague like in Munich. There are enough jobs elsewhere too. If you can’t afford it, you have 3 options:
1. Find a better paid job and stay there.
2. Keep the job and live outside of Prague
3. Find a job somewhere else where life is more affordable and live there.
I see this situation in Munich: People move to Munich and cry, that everything is so expensive. It’s expensive in Munich for 15 years now and there are every month more people coming to Munich looking for a place to exist, coming from a good payed job somewhere else from Bavaria with more affordable life.
@@janvozniak1235 But if you are born in that city, it's really sad when growing prices of housing force you to leave your native city. I've just visited my sister in her new apartment in Prague, they pay 1300 eur/month there!!! Most of people in Prague barealy earn that monthly, it's absolutely crazy and it's fault of all governments from 90s to these days, they all speak like they know about this problem and want to do something with that, but non of these governments actually did something to support constructions, lower bureaucracy and shorten time you need to get construction permit. Because there are main reasons why it is that expensive here, when you buy a land, it can take even 15 years before you can actually start with construction, we are the worst in whole world in this and that's the main problem. Another problem is that when they actually build some apartments, it's mostly targeted to better class people, so it doesn't solve anything, more like vice versa, they build new luxury apartments and owners who already had something around increase prices too when they see that such price is now standard.
I am not overreacting it, but I think there can be a revolution because of this, because it's getting really to an extreme and when rent of some average apartment will be double of your salary, people will just have no other option then do another revolution, because this is not healthy free market, it's completely broken here.
And if i could ask Tramly.
Could you one day do a video about pick-up trucks and/or SUVs in prague? I see them parked on the sidewalks and once i saw one with nose almost as big as me (i have 178 cm)! Is it eaven legal to drive these huge cars in Prague? Their are so long and so high, it isn't save. If you would talk about them, could you also talk about the marketing that is implementet in order to get people to buy them?
if it's not literally illegal, then it's legal - old Czech proverb 😀
I have already made a video about SUVs and pickups in general: czcams.com/video/BsGLTWFX-E4/video.htmlsi=1-UEqsym8iJmVkIn
but in the future, I could make a video about these tanks in Prague, specifically
I work downtown and feel like I rarely used to see such vehicles only a few years ago, but recently I've noticed more big pickups and SUV/Hummer (or hummer-esque) vehicles appearing. They really stand out in the narrow and busy streets in the historic center. I lead walking tours so leading tour groups around traffic is unfortunately a daily game of Frogger for me.
I never do short term rentals. Prague has such nice hotels.
I have bad experiences with Airbnb, I prefer normal hotels with at least 2 stars. Just one example - I ordered apartment in Katowice/Poland thru airbinb becuase of Rammstein concert, owner probably didn't know abut concert yet, so she canceled my order without reason because she realized that she can rent it again for much higher price, it's just not realiable like normal hotels. With actual hotel, you can order it like 6 months before your stay and you KNOW that your room or apartment will be waiting for you, it's realiable and when it has reception 24 hours, you know you will not get stucked at street in middle of night.
I agree, I try to avoid short term rentals as much as possible
Praha už má svoji Pražskou developerskou společnost, která chystá projekty na celé čtvrtě, které pak předá investorům s prodejem pozemku, na kterém navíc vydělá - už se takhle chystá něco kolem Českomoravský a myslím že i něco na Nových Dvorech u budoucího metra. To by mohl být i zajímavý návrh na budoucí video. Tímhle stylem se staví i velmi úspěšná proměna HafenCity v Hamburku.
Určitě bych se na to mohl podívat!
AirBnB's influence is actually largely very overblown. The number of total rentals (which includes everything from one bedroom in a unit to an entire apartment) is about 6.700, concentrated primarily in the city's inner center. Considering Prague has about 720.000 units, AirBnBs represent less than 1% of the city's housing stock and not anywhere enough to manipulate the overall housing prices over the entire city. More people move to the city every year than this number of units.
There is also another important aspect that you forgot to mention: the changing household structure in Czechia. Today there are far more single person households, in Prague they represent 37% of all households, and 2-person households come in second at 34%. This proportion has only been growing as time goes on. It is a great problem, because much of Prague's housing was built in the last century, when it was normal for multigenerational households to share one apartment. Households of even 5, 6, 7, people were normal back then. And since most Pre-War housing and even Socialist Panel Estate housing focused on constructing flats for growing families, they prioritized 3+1s or 1+1s for starters, there is a general dearth of 2+1 units. Much of the city's housing structure is insufficient for the current lifestyles of the city's inhabitants. Moreover, when we take into account widowed seniors, who opt to remain in their over-sized 3+1s rather than downsizing, they get government housing support to be able to remain in place. This diverts municipal funds to putting band-aids on these affordability problems, when it would arguably be much more effective to keep that money and invest it directly into the construction of social housing for seniors instead. As it is now, the government is subsidizing, by way of these seniors' rents, either private landlords directly , or subsidizes these seniors' energy wastage.
Causation doesn't mean correlation. There are more single hauseholds due to the enormous prices of bigger hauseholds. It isn't lifestyle, it is necesity.
@@chleba47927 ...That doesn't make any sense. There are more single households because of fragmenting family structure - there is more loneliness, living alone is more socially acceptable and desirable (larger privacy expectations), working age individuals are more mobile, and importantly, improvements in life expectancy means there are far more seniors who now live alone, widowed or away from their children.
"due to the enormous prices of bigger hauseholds" It is the exact opposite. Being in a single person household means all expenses, especially the rent/mortgage fall on that one individual. The housing unaffordability crisis is actually forcing, adult children to remain living home with their parents longer (in Czechia the average age people move out from their family is now 26), couples to move in together sooner and increasing the amount of flat-sharing arrangements in order to spread out the cost of housing. Larger households, especially were more individuals generate income to contribute are cheaper due to economies of scale. Moreover, per m2, apartments get cheaper as they get larger, since it both a 30m2 1+1 and 130m2 3+1 will still have to both have the same kitchens, appliances, bathrooms etc.
Maybe yes, I would say that worse problem are american expats who are moving to Prague for long term housing and they are increasing prices of housing because they still earn US money (they mostly do some online work) and don't care if apartment is for 20 or 30 tousands CZK/month, so owners scam them and they are happy anyway because it's still cheap for them, but this makes housing in cities not available for locals, because when you have 25-30 000 CZK/monthly after taxes, you really can't pay 30 for apartment.
@@Pidalin Again, those are negligible numbers of people, who would not be able to move the needle of the whole market. There are currently 6 921 Americans that have residence permits in Prague, and the actual number of households is much lower.
As for apartment prices, it is at this point less to do with scamming and more basic inflation. We had about 30% inflation in the past 4 years. That means apartments that went for 22k in 2020 now would have to be priced at 28.6k just to maintain value, and that is without any expected increased demand pressures (which there of course were due to the constant influx and now strain from the refugee situation). In reality, 30k is not much to pay for an apartment anymore, the luxury real estate sector is priced much high than that (60-80k is more common, and focuses on that manager/executive expat class). Look at it also from the lens of flatshares: rooms in 3+1 type apartments the inner center now routinely rent for 12k. With the average gross salary in Prague now being 53k as per the ČSÚ, or 41k netto, 12k is just under 30% or what is within the target for budgeting on housing.
@@serebii666 Average salary in Prague is a nonsense because there are headquaters of big companies, managers and politicians. Talk with actual people, the vast majority of them is making fries in McDonnalds or work in services. I live in a village and work as CNC programmer in local furniture company and I have much better salary than most of my friends who stayed in Prague.
Big salaries in Prague is a lie and myth and people should stop spreading it, because it's dangerous lie. People here really believe that everyone in Prague is rich, but it's actually vice versa, almost everyone here has a house, these villagers are milionares while people in Prague own maybe 4 chairs and TV. That average salary is absolutey nonsense. And even if it was common to have 41k netto, it's still not enough to have comfortable life when you pay 20+ just for rent, you always need at least 2 working people in one apartment and forget about some vacations.
Here in village as a CNC programmer/operator, I have around 35 000 after taxes, none of my friends who stayed in Prague has such money.
Always amusing to draw parallels to where I live (UK), we don't have a decade long permitting process but we have NIMBYs galore and not enough social housing. In my city, it seems we build private Student flats (Our tallest buildings are Student flats) but we don't build council housing or anything to help the problem (There is a long long story to why but I won't start). We all know the problem but everyone hates the known solution that the national government makes impossible to enact.
let me guess, Thatcher contributed to the fact that council housing isn't built anymore?
www.ft.com/content/8d5f2952-3c17-11e8-bcc8-cebcb81f1f90
@@TheTramly That and her economically destroying half of the UK so they would have no hope to being able to build generation wealth to be able to buy a home down the line. Can't afford a home on a shrinking Dole.
It's not just a Prague problem is a world problem ! We have the same problem here in Canada. In some Canadian city only Millionaire can afford a new house. I am lucky to have inherit my parents house. If not i will be living in the street I am an Engineer too.
Yeah... the housing situation is absolutely insane across the world
Da möchte man nicht leben... so ganz ohne Tesla Tunnel... #SmíchovCity 😅
Natürlich, man kann nicht ohne Tesla-Tunnel leben
PRAHA SMRDÍ.
(Jinak big brain video)