Buying a property in Prague: a complete guide

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Yes, the analysis of Prague's property market is included in our pack

Are you considering investing in real estate in Prague? You're not alone!

Many people are drawn to Prague's architectural beauty and fantasize about owning a historic apartment or a modern loft there.

Is it financially viable, though? Are property prices increasing in Prague? Is it expensive? Is it wiser to buy property in Prague 1 or Vinohrady? What are the taxes? Can I get a very good rental yield? Where?

We have the answers.

The Investropa team has done their homework and know this market well. As a matter of fact, we've compiled all our findings in one pack. Get it now.

In the lines below, we'll provide you with helpful information.

How is the real estate market in Prague?

Is the property market going up or down? People have different ideas. Us? We rely on the latest data and stats for accurate answers.

Types of properties

In Prague, you can find various types of properties for sale, including apartments, houses, and commercial spaces.

Apartments range from cozy studios to larger multi-bedroom units in both modern complexes and historic buildings. Houses vary from charming traditional homes to more contemporary designs, often featuring gardens or yards.

Commercial properties encompass shops, offices, and restaurants, available in different sizes and locations across the city.

Whether you're looking for a place to live or invest, Prague offers a diverse range of properties to suit your preferences and needs.

Should you buy or rent?

(If you want to live there yourself and not rent it to others)

If Prague has captured your heart as your city of choice, you might be considering whether it's better to buy a property or opt for renting in this Czech capital.

Without a doubt, you should buy if you want to acquire equity and have more control over your living space.

One data can help you make a decision - the property price-to-rent ratio. Use this metric to see how rental income can help you pay off the property over time.

According to Numbeo, the property price-to-rent ratio in Prague is around 37.37, which is very high.

It indicates that buying a property is more expensive in the short term compared to renting. However, buying can still be a viable option if you plan to live in Prague for an extended period or if you think property values will increase.

Property prices in Prague

On average, according to the last data from Czech Statistical Office, buying a property in Prague would cost you around $3,500 per square meter.

Naturally, property prices are quite spread out. A flat in Prague city center might have a different price per square meter than a suburban house in Vinohrady. We actually give you a more detailed breakdown in our pack for buying property in Prague and in Czechia.

To give you a sense of scale, it means that, instead of buying an apartment in Paris or London, you can afford 4 properties in Prague.

Also, housing prices in Prague are 27% cheaper than in Budapest.

The most expensive neighbourhoods in Prague are probably Mala Strana, Vinohrady, and Dejvice, while the cheapest are likely Karlín, Žižkov, and Vršovice.

Trends

First, let's acknowledge that the Czech Republic offers, today, a lot of stability to investors. The last Fragile State Index that has been reported for this place is 39.9.

Keep this in view when pondering the viability of buying a property in in Prague.

Also, according to the IMF’s forecasts, Czechia's economy is expected to soar by 9% in the coming 5 years, resulting in an average GDP growth rate of 1.8%.

If you're about to invest in real estate in Prague it's a good thing because when the economy grows, people often experience an increase in wealth, it typically translates to a surge in housing costs.

Also, in Czechia, the average GDP per capita has changed by 4.3% over the last 5 years. It's not much, but the growth is here.

Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Czechia right now.

Buying property in Prague

Buying real estate in Prague can be difficult due to the lack of reliable and updated information available about the process. That's why we have created the pack to buy property in Prague and in Czechia.

Buying process

Inside our pack, we've outlined the complete buying process, including a detailed breakdown of prices and yields per area, tips for negotiating the price, and information about mortgage options.

Here, we're presenting you with a more straightforward version.

This is the step-by-step process to purchase a property in Prague:

1. Research the market and set a budget.
2. Hire a licensed Czech real estate agent.
3. Choose a property and negotiate the price.
4. Sign a reservation agreement and pay a deposit (usually 5-10%).
5. Conduct due diligence with the help of a lawyer, verifying ownership, zoning, and encumbrances.
6. Sign the purchase contract in the presence of a Czech notary, providing the necessary identification documents.
7. Pay the agreed-upon deposit (usually 10% of the property price) into an escrow account.
8. Obtain the "Extract from the Land Registry" (Výpis z Katastru Nemovitostí) to verify property details.
9. Apply for approval from the local municipality's foreign land acquisition department (for non-EU citizens).
10. Secure financing or mortgage approval.
11. Transfer the remaining payment to the seller's account upon contract fulfillment.
12. Register the property at the Czech Land Registry, completing the ownership transfer process.

Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Czechia.

Make a profitable investment in Prague

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Where to find a property

Looking for properties in Prague? These websites can help.

• SREALITY - Sreality.cz offers a vast real estate selection in the Czech Republic and abroad, helping users find suitable properties.
• Engel & Volkers - They help you find properties for sale or rent in the Czech Republic, offering a diverse real estate portfolio.
• European Property - European-Property.com offers a diverse selection of properties for sale and rent across various European countries.
• REALTY TANVALD - A reliable real estate agency offering property sales and rentals in Chrudim, Czech Republic.
• Realting - An international real estate platform offering residential and commercial properties for sale and rent in the Czech Republic.

Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Czechia.

What properties?

As mentioned before, the average price per sqm in Prague is $3,500. A 1-bedroom property with 60 square meters would cost approximately $210,000, and a 2-bedroom with 85 square meters would cost approximately $298,000.

However, property prices can vary because of their qualities and where they're located.

Property prices in the top areas of Prague are commonly at a premium. A house in Malá Strana might be around $660,000, and an apartment in Vinohrady could be priced at $370,000.

Some spots will be friendlier to your wallet. You may find a residence in Zizkov for $350,000, or you might come across a residence in Holesovice priced at $220,000.

We give more details about property types and areas in our full pack for buying property in Czechia.

Common mistakes

Here are the main pitfalls when buying a property in Prague, Czech Republic:

• Restitution claims: Properties may be subject to restitution claims from previous owners or their descendants, leading to legal disputes.
• Zoning restrictions: Complex zoning laws may restrict property use or renovations, affecting potential investment plans.
• Historical preservation: Properties in protected areas require adherence to strict preservation guidelines, limiting design and development options.
• Currency exchange risks: Fluctuating exchange rates can impact the cost of the property when transferring funds from a foreign currency.
• Rental regulations: Rent control laws and tenant protections can affect rental income and property management strategies.
• Energy efficiency requirements: Properties must meet specific energy standards, potentially necessitating costly renovations for compliance.
• Unfamiliar leaseholds: Certain properties might have leasehold ownership structures with limitations and additional costs for lease renewal.
• Non-EU restrictions: Non-EU buyers may face additional approval processes and limitations on property acquisitions.

We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.

Everything you need to know is included in our Czech Republic Property Pack

Living in Prague

Living in Prague is a great experience, with its vibrant culture, stunning architecture, and excellent public transportation system, making it an ideal place to purchase property.

Cost of living

The cost of living in Prague is generally considered to be quite low compared to other major European cities. Prices for basic necessities such as groceries, transportation, and housing are much lower than in other major cities.

Here are some examples to better understand the cost of living in Prague:

• Rent for a one-bedroom apartment in Vinohrady neighborhood: $1,100/month.
• Monthly public transportation pass with Prague Integrated Transport: $30.
• "Svíčková" dinner for two at a local restaurant: $60.
• "Pilsner Urquell" at a pub: $3.
• Groceries at Tesco or Albert supermarket: $100/week for a family of four.
• Basic utilities for an 85m² apartment with Pražská energetika: $90/month.
• Ticket to a classical concert at Rudolfinum: $20.
• "Kofola" at a café: $2.50.

Neighbourhoods

Since our intention is to provide information in a clear and reader-friendly way, we've created a summary table outlining the various neighborhoods in Prague. For yields, prices and rents, check our property pack.

Life in Prague

Prague is the economic center of the Czech Republic, and its economy is largely driven by its strong service sector. The city has seen steady economic growth over the past several years, with a focus on innovation and technology.

Upon reviewing the IMF's data, we can see that Prague's GDP accounts for almost 22% of Czechia's GDP. That's a good thing because residents of cities with solid economies usually enjoy better quality services, contributing to a higher standard of living.

What expats usually like the most in Prague is the city's vibrant cultural scene and its stunning architecture. Additionally, the city's nightlife and its variety of local restaurants and cafes make it a great place to live.

Another great point to note is that Prague is an incredibly safe city, with a crime index of only 25, which is a very impressive score. Prague has a culture that is heavily focused on respect and community, which has led to a low crime rate.

A good point for a property investor - Prague has a comprehensive mass rapid transit system consisting of multiple metro lines, several trams, and buses.

Access to healthcare in Prague is excellent, with a Healthcare Index of 74. A strong healthcare setup always reflects positively on real estate.

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Renting out in Prague

This part is for you if you want to buy a property with the goal of renting it out and making money from it, rather than living there.

Long-term

Tenant Profiles in Prague

According to the data reported by Wikipedia, the home ownership rate in Czechia is 78%, which is average.

It means that, if you decide to buy and rent out in Prague, there will be a good number of people who can become your potential tenants.

If you decide to buy and rent out to long-term tenants, you should target families, students, and young professionals who are looking for a safe and affordable place to live in Prague. Expats and tourists looking for short-term rentals are also in demand.

Here is a little summary table we've made for you.

Rental yields

As of today, rental yields in Prague are floating around 2 or 3%. It's low. Among other things, this low performance can be explained by Prague's small rental market and high demand for rental properties, driving up prices and lowering rental yields.

Rental yields in Prague tend to be higher in areas with multiple transport links and a variety of amenities nearby, as these attract more tenants willing to pay higher rental prices. Properties close to universities, parks, and shopping centres also provide higher rental yields as they are in high demand from students and young professionals.

For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.

Finally, be aware that rental incomes in Prague are taxed at 15%, which is not much.

Short-term

You could also decide to rent short-term to tourists visiting Prague for business or leisure, as well as students studying in the city for a semester or two. Additionally, you could rent to expats looking for temporary accommodation while they search for a more permanent residence.

If you decide to go with that option, look for properties in the Old Town, New Town, Vinohrady, and Holešovice neighborhoods. All these areas are popular among tourists and have plenty of short-term rental opportunities.

Currently, there are approximately 7,000 active Airbnb listings in Prague, reflecting a highly dynamic and bustling short-term rental market. The average daily rate stands around $102.

You have the opportunity to generate a nice additional income stream then. According to online testimonials and analytics platform like AirDNA, Guesty and Inside Airbnb, people who offer short-term rentals in Prague can make around $1900 per month. Also, the average occupancy rate is estimated at 77%.

Is it worth buying real estate in Prague then?

Absolutely, buying a property in Prague is a fantastic idea if you're in it for the long haul. It's like planting a seed in fertile soil and watching it grow.

If you plan to live in Prague for an extended period, owning a property not only offers you a sense of permanence but also allows you to benefit from the city's steady economic growth and the potential appreciation of property values. Despite the initial upfront costs, the property price-to-rent ratio in Prague suggests that owning a home here can make financial sense over time, giving you equity and control over your living space.

However, if your stay in Prague is more short-term or uncertain, it might not be the best choice to buy property. The high property price-to-rent ratio means that renting could be a more cost-effective option for temporary residents.

Additionally, navigating the complexities of the Prague property market, with its various neighborhoods and potential legal issues, can be daunting for inexperienced buyers. Moreover, low rental yields in some areas might not make it the ideal choice for those seeking high rental returns.

It's crucial to align your property decision with your specific goals and circumstances, keeping in mind that the beauty of Prague's real estate market shines brightest for those who plan for the long road ahead.

Make sure you understand the real estate market in Prague

Don't rush into buying the wrong property in Czechia. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

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The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.