DEVELOPMENT OF HOUSING AFFORDABILITY IN THE REGIONS OF THE CZECH REPUBLIC IN THE PERIOD 2011-2024

This thesis explores the development of housing affordability across the regions of the Czech Republic from 2011 to 2024. It analyzes the evolution of housing affordability and identifies key factors that have influenced these changes. Furthermore, it investigates the hypothesis that „ the availability of owner-occupied housing deteriorated in all regions of the Czech Republic during the observed period." The theoretical section offers a comprehensive examination of the economic and social determinants shaping the real estate market and impacting housing affordability. A review of the literature reveals that housing affordability is affected by a combination of factors, including interest rates, economic growth, demographic trends, and fiscal and macroprudential interventions, such as mortgage market regulation. It is emphatically noted that policies intended to enhance housing affordability frequently fail to meet their objectives. The section also posits that without significant alterations in housing market governance, the trend towards decreasing housing affordability is likely to persist. The empirical portion of the thesis applies theoretical models to actual economic data. The analysis begins with collecting and assessing data concerning house prices, median population incomes, and the development of the P/I index. It is observed that all three economic indicators increased during the study period. Subsequently, the degree of overvaluation is determined using a method that replicates the prudential approach of the Czech National Bank. By the end of the period, property prices in most regions exceeded their fundamental values. The empirical analysis concludes with the creation of a proprietary housing affordability index, based on which the tested hypothesis cannot be disproven. It can be concluded that the availability of owner-occupied housing is actually decreasing. The analysis terminates in 2022, as more recent data were unavailable at the time of writing.