Determinants of House Prices and Housing Affordability Dynamics in the Czech Republic

Abstract

The property market in Central European Region countries share a number of common features among which privatization, restitution of property, massive regulation or underdeveloped financial market all of which contributed on persisting property market imbalances and continuous dynamic changes. These changes have recently been significantly exacerbated by the presence of the Covid-19 pandemic, the war in Ukraine and a significant increase in energy prices (heating of apartments and houses, production of building materials, etc.). It is currently difficult for investors and people looking for their own housing to predict the future development of housing prices and housing affordability. This article analyses the housing market trends in this region taking the example of the Czech Republic using unique primary statistical data. It offers a deeper insight into the trends present on this market, identifies significant determinants of housing prices and evaluates changes in housing affordability. Our research reveals why the property market trends may contribute to opening inequality scissors and thus economic stability. This research is based on primary statistical data mined by EVAL software which allows to gather information about the development of the real estate market from real estate advertising.