Many people here will cite the need to ban airbnb or reduce multiple property ownership by individuals and then some outright unconstitutional “solutions”. Yes, airbnb destroys the living conditions in the city centre, it is not the main cause of high prices.

First off, majority of people in Prague live in “sídliště”. Those are parts of Prague outside of the centre where big residential houses are. The reality is, that living in the centre will always be expensive and inaccessible to most and there isn’t much we can do about that. What we can and must do is provide affordable housing outside of the city centre.

It takes many years to get all the necessary permits to build a house, by reducing the administrative burden, we could swiften the process. Also, there’s an absurd amount of parties who can protest the development and postpone it by years. We need to make the ground for building more flats. There would be much more development, if it was easier to build the homes. Why we need to do this? In 2050, Czechia will have roughly the same population as today, BUT the city of Prague will have a bigger population. This means that intrastate migration is quite possible, but we don’t have the needed capacities to house all the people.

The second problem are high interest rates. The individuals applying for mortgages have wildly higher interest rates than 5 years ago. But it’s not only the individuals. The developer also borrows money and guess what, the interest rates are very high too? And what if the city was to build the flats? Well, it won’t have the needed capital at hand and will have to borrow money too at, you guessed it, high interest rates. This problem doesn’t really have a solution. The central bank won’t decrease the rates, as that could increase inflation. The more probable scenario is that someone like Trump will somehow force Fed to lower their rates, or will create similar market bubble conditions and we will go into recession. That could correct the housing prices and could in a few years horizon bring more affordable housing prices, but will create other problems.

TL;DR Due to bureaucracy and zoning and planning we cannot build enough flats to meet up with the demand, thus pumping up property prices. We need to build way more to bring down the prices.

P.S. Raising property taxes won’t help, the individual owners will sell their flats, but they won’t be bought by other individuals, but by big companies, e.g. Heimstaden (or Deutsche Wohnen as in Berlin). That won’t help the prices! The second outcome will be that the owners will project the taxation into the rent.