Prague is becoming increasingly more expensive than Bratislava. Employees continue to earn more in the capital of the Czech Republic, though the cost of living is also rising, especially in regards to housing. This is evidenced by the results of research done by JLL, which compared the prices of apartments in both capitals.
The average salary in the Czech Republic and Slovakia varies slightly. At the end of the first half of 2018, the average income in Prague was 39,688 CZK (about EUR 1,525) per month, whereas in Bratislava, it was 35,699 CZK (about EUR 1,372) per month. The difference between the income of the inhabitants of the two capitals is about 4,000 CZK, so a person receives 11.1% more on average in Prague.
However, the key difference between the two cities, at a first glance, is in the housing prices. In the first half of this year, housing prices were up to 16 % more expensive in Prague than they were in Bratislava. The average price of an apartment (including VAT according to the legislation in both countries) in Prague was 91,928 CZK per square meter in the first half of this year (about 3,533 EUR). On the other hand, the price per square meter in Bratislava, was 78,966 CZK (about 3,035 EUR) for the same period. Though the average gross wage in Prague is only 11.1% higher, flats are about 16.4 % more expensive in the Czech capital than in Bratislava.
Even more striking differences can be observed in the prices of luxury apartments. In Bratislava, these apartments were on offer for 104,944 CZK (about 4,033 EUR) including VAT per square meter during the first six months of this year. In Prague, these prices reach a level of 195,846 CZK (about 7,527 EUR) including VAT per square meter. A flat (in comparison to price per square meter) in the highest price category could be bought in Prague for 87% higher price on average. A big difference can also be seen in how many apartments are sold in the pre-sales stage. In Bratislava, only 5%, of all apartments sold are pre-sales, whereas in Prague, this share reaches 20%.
But what do both cities have in common? If we compare the current prices of apartments in the two capitals in regards to the same period in 2017, it is possible to see a 9% rise in prices in Prague and a similar 8% in Bratislava. Another similarity is the disposition of the apartments that attract buyers the most. Interest is growing in smaller apartments, with two bedroom plus kitchen corner (2+kk) being the most popular in both cities.
The most often sold apartment in Prague is the disposition of two bedroom plus kitchen corner (2+kk). Therefore, for an example we chose a flat with an area of 50 m2. In Prague, you can buy such an apartment, according to an average price per square meter, for 4,596,378 CZK (incl. 15 % VAT, which is roughly 176,648 EUR). One has to save almost 156 net monthly salaries on this exemplary flat and he will reach it in 13 years. If one wants to buy the example flat in Prague, he has to earn at least CZK 54,000 gross monthly according to the new established limits for mortgages from the ČNB (if we consider LTV 80%, repayment period of 25 years, fixation for 5 years and interest rate of 3%).
“We expect that the newly introduced limits for mortgage lending will have a negative impact on the number of apartments sold in the upcoming period. Although demand is still strong, unfortunately these new regulations are already beyond reach for many people,” said Blanka Vačkova, JLL Head of Research.