Housing costs are eating up young Czechs' incomes: a Prague flat now costs 15 years' salary

Today's young people in Czechia generally earn and live better than their parents' generation did, but they face a far tougher challenge: access to housing. That's according to a new study by the IDEA think tank, which compared living standards across generations.

"Property prices — and in recent years, rents too — have risen far faster than incomes, especially in big cities. A young person today needs much more of their own money and has to take on far more debt than the previous generation did," said economist Michal Šoltés of IDEA, one of the study's authors.

Flats cost several times more

The numbers tell a striking story: back in 2005, a standard 70-square-metre flat cost roughly four years' salary nationwide, and nearly ten years' salary in Prague. Today, the same flat in the capital would set you back 15 years' worth of earnings.

"So far, there's nothing to suggest the situation will improve quickly," said Petr Hana, head of real estate and construction at Deloitte.

Older generations found themselves in a far more favourable position, partly because many acquired their housing under conditions that simply won't be available to today's youth: after the fall of the communist regime in 1989, the country saw mass privatisation of flats and the restitution of property to former owners. IDEA links this directly to the unusually high rate of homeownership among Czech households.

Intergenerational support is playing an ever-bigger role in housing matters. "Parents have always helped their children get on their feet, but housing assistance is growing as homes become less and less affordable," write researchers Martin Lux and Martina Mikeszová in their paper "Family Solidarity and the Housing Market." Their findings suggest that this kind of intergenerational support can deepen inequality between young people who have family backing and those who can't rely on it.

Incomes, at least, are easier

When it comes to income, though, the younger generation is faring noticeably better. More than two-thirds of older Czechs grew up in households that barely had enough money to get by, compared with just over a third of millennials.

The survey also captured how far technology has come: only two in three members of the older generation had a computer at home growing up, compared with 97 out of 100 young people today. A similar share of today's youth can afford to eat meat at least every other day — among their parents, that figure was just 86%.

Young people today are also starting families later. According to IDEA's analysis, in the early 2000s women had their first child at an average age of around 25; today it's past 29. And the reason isn't always simply a desire to finish education, build a career, or enjoy a longer stretch of freedom first.

Read also: Rental scams in Prague: how to spot the fraudsters

Source: novinky.cz