Prague City Guide

Prague is Central Europe's most expensive residential property market and one of its least affordable relative to local incomes. After a brief 2022–2023 cooling, the market resumed a strong upswing through 2024–2025, with the national house price index growing roughly 10% year-on-year, driven by a chronic housing shortage, slow building-permit approvals, falling mortgage rates and persistent demand. New-build asking prices hit record highs of about €6,700/m² at end-2024, transaction prices for all apartment types reached roughly €5,400/m², and prime central districts (Prague 1 and 2) regularly exceed €8,200/m². The flip side of high prices is low income for investors: Prague's gross rental yields are among the lowest in the CEE region, around 2.8–3.0% citywide, and its price-to-income ratio of roughly 18–19 makes it one of the least affordable capitals in Europe. Prague is therefore a capital-appreciation and capital-preservation play rather than a cash-flow market, buyers accept thin running yields in exchange for a stable EU economy, strong long-term value retention and limited supply that supports prices. For foreign investors the legal environment is unusually open: since 2011 there are no restrictions on foreigners (including non-EU citizens) buying Czech real estate, and the Czech Republic abolished its 4% real-estate-acquisition tax in 2020, lowering entry costs. The main headwinds are the low yields, an emerging crackdown on short-term (Airbnb) letting, and an affordability ceiling that limits how much further prices can run.