Work detail

Home Ownership vs. Renting: Comparison of Costs in the Czech Republic

Author: Bc. Andrea Tláskalová
Year: 2018 - summer
Leaders: PhDr. Hana Hejlová
Consultants:
Work type: Bachelors
Language: English
Pages: 74
Awards and prizes:
Link: https://is.cuni.cz/webapps/zzp/detail/185476/
Abstract: This thesis develops a cost-benefit analysis of ownership versus renting and
investigates the net present values of these alternatives within three different
investment and consumption strategies. In order to investigate interactions among the
variables and to perform a more detailed analysis, microdata on real estate purchase
offers and real estate rental offers are used. Due to the size of the real estate market
and the diversity of property types, we focus our analysis on the real estates located in
Prague. The thesis’ results indicate that ownership is more profitable than renting
under the conditions of only one group out of twelve. However, the thesis presents
values of three key parameters of home ownership costs for which ownership would
be equally profitable as renting. Finally, we attempt to explain the price-to-rent ratio
using various apartment characteristics. The OLS regression method uncovers
negative impact of the ground floor variable and the panel building variable on the
ratio, resulting in higher relative affordability of buying when compared to renting.
Number of rooms variable, on the contrary, shows positive impact on the ratio and an
additional room in an apartment results in lower relative affordability of buying when
compared to renting

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