It is not surprising that among the examined capitals, the highest housing prices are found in the market of the capital of the Czech Republic, which is also the most economically developed, where the square meter of apartments in the city center, in good condition, reaches HUF 2.8 million. By the way, the Czech capital leaves behind several large Western European cities, although this only applies to a narrow downtown area.
In the suburbs of Prague, prices are somewhat lower, but even there the price per square meter is around HUF 1.8-1.9 million. The city center of Bratislava took third place, followed by the center of the Polish capital, Warsaw. The average price per square meter in the former is HUF 1.7, and HUF 1.6 in the latter. The suburbs of Bratislava and the center of Budapest are very similar, the average price in both places is around 1.3 million forints, while the suburbs of Warsaw are no more expensive than the outer districts of Budapest, in both places it is around 900,000 forints per square meter of a new apartment. However, the prices are significantly lower in Bucharest, where the prices in the center are only close to the Budapest suburban average, while in the outskirts of Bucharest you can still find apartments at prices of slightly more than half a million square meters.
On the other hand, the level of rents is not always commensurate with housing prices. Of course, the city center of Prague is at the top in this indicator as well, but not nearly as much as the housing prices would justify. A studio apartment in the center of the Czech capital costs about HUF 350,000 per month, while in the much cheaper downtown Warsaw it costs almost HUF 300,000. The suburbs of Prague and downtown Bratislava are almost head-to-head, with rent levels of around HUF 250,000 to HUF 250,000, while downtown Budapest follows only the suburbs of Warsaw, with around HUF 200,000. It is also important to point out here that this does not refer to the rents of average-sized, but smaller, studio apartments. The city center of Bucharest is already ahead of the suburbs of Budapest in this regard, with the former costing 160-170,000 forints and the latter around 150,000 forints, while in the outer districts of the Romanian capital you can find studio apartments in good condition for as little as 120,000 forints.
Based on the above figures, we also find significant differences in the gross returns.
- Under 4%: Prague city center
- Between 4-5%: Prague suburbs, Bratislava suburbs, Bratislava city center and Budapest city center
- Between 5-6%: suburbs of Budapest, downtown Warsaw, downtown Bucharest
- Above 6%: Bucharest suburb, Warsaw suburb
Therefore, if we specifically only look at housing market yields, it would be worthwhile to look at the latter two, but at the same time, it is also worth considering the market stability of the countries or the demand for the given location.
Prague is expensive, but incomes are also higher?
As we wrote earlier, in recent months we have already seen a slowdown in the housing market of many countries, but the increase in prices that has taken place in recent years has overall worsened the possibilities of obtaining housing.
Four of the five least affordable housing markets in Europe are V4 capitals,
which is the result of high housing prices and lower relative incomes. Last year, European capitals were characterized by the deterioration of the availability of housing. According to the MNB’s Housing Market Report, for example, in Budapest in 2021, 16.3 years of national average income and 18.0 years in October 2022 were required to purchase a 75 square meter residential property.
As the figure above shows, the value of the housing price/income ratio is highest in the capitals of Central and Eastern Europe, where the proportion of owner-occupied dwellings is higher than the European average. Even within this, Prague is at the forefront, because even though wages there are up to 50 percent higher than in Budapest, the difference in housing prices is even greater. Bratislava came in second place, but even in Warsaw, which is in fourth place, apartments are more expensive relative to income than in Budapest, which is in fifth place.
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