The real estate market in the Czech Republic, especially in major cities, is undergoing significant changes. In Brno, the country’s second-largest city, renting a home is now cheaper than buying an apartment with a mortgage. This shift is driven by rising interest rates, increasing property prices, and stable rental costs.
While homeownership was traditionally considered the better financial option for long-term wealth accumulation, in 2024, more Brno residents are choosing to rent.
Rising Mortgage Rates and Their Impact on the Market
One of the main reasons for the declining attractiveness of mortgages is the increase in interest rates. In recent years, the Czech National Bank has raised its key interest rate, making mortgage loans more expensive.
Currently, the average mortgage rate in the Czech Republic ranges from 5.5% to 6.2% per year, whereas 2–3 years ago, mortgages were available at rates of 2–3%. This significant increase has resulted in much higher monthly mortgage payments.
Comparison of Monthly Expenses: Renting vs. Mortgage
Let’s compare the costs of renting and buying a typical apartment in Brno:
- Two-room apartment (50 m²) in the city center:
- Average purchase price: €250,000
- Mortgage for 20 years at 6% interest: €1,610/month
- Rent for a similar apartment: €1,200/month
- One-room apartment (35 m²) in a good area:
- Average purchase price: €180,000
- Mortgage for 20 years at 6% interest: €1,160/month
- Rent for a similar apartment: €900/month
As seen in the examples above, renting in Brno is 20–30% cheaper than paying a mortgage.
Why Is Renting Becoming More Popular?
📌 Flexibility – Renters are not tied to one location and can easily move if needed.
📌 No large upfront investment – Buying a home with a mortgage requires a down payment (typically 20% of the property price), which means €40,000–50,000 for an average home.
📌 No additional costs – Homeowners have to cover insurance, property taxes, maintenance fees, and possible repairs, while renters are free from these obligations.
The Future of Brno’s Real Estate Market
Experts predict that rental demand will continue to grow in 2024–2025. Rental prices have stabilized, while property prices and mortgage rates remain high, making homeownership less attractive.
Possible trends include:
✅ Increase in rental housing development – Developers are responding to market demand.
✅ Expansion of government rental subsidies – The state may introduce support programs for young people and lower-income groups.
✅ Potential mortgage rate reductions – If inflation decreases, mortgage affordability may improve.
Conclusion
📌 Renting in Brno has become a more affordable alternative to taking out a mortgage, changing traditional views on homeownership.
📌 High mortgage rates and rising property prices are pushing many residents toward renting instead of buying.
📌 In the short term, renting remains the better financial option, but if interest rates decrease, the market situation could shift again.
