A record number of flats are being built, but their prices are not falling!
Last year, Czechia broke a record in apartment construction. According to calculations by the Statistical Office, more than 45,000 apartments were built, i.e. 10,000 more than in the previous year. In Prague, the number of construction starts rose from three and a half thousand to nine thousand. Unfortunately, the current, albeit faster, pace of construction is not sufficient to satisfy the strong demand contributing to the growth in housing prices.
No acceleration of construction processes in sight
According to experts, it is necessary to speed up the building permit process, which, according to recent surveys, is still dragging on. A systemic change in the building permit process, which developers would very much welcome, is therefore not in sight. The current increase in newly built apartments is based more on the fact that developers have obtained approval for residences with multiple accommodation units.
Extremely high real estate prices have been plaguing the Czech market for a long time. Apartments have become an investment not only for ordinary people to protect their savings against inflation, but also for real estate funds, which until recently paid more attention to industrial, commercial, and office properties. This interest in buying apartments among investors and ordinary people has created an imbalance between supply and demand.
Apartments in large cities have become insanely expensive
Apartments in large cities have become so expensive that only people with above-average incomes can afford to buy them. Currently, the price per square meter on the Prague market is around CZK 144,000, and in Brno, apartments were selling for an average of CZK 124,500 per square meter at the end of the year. Demand is expected to weaken over the next three years due to more expensive mortgages. In terms of prices, it would help if more apartments came onto the market thanks to systemic changes.
The current coalition of ODS, STAN, KDU-ČSL, TOP 09, and the Pirates disagrees with last year's government's new building law, wants to revise it, and postpone its effectiveness until July 2024. The new government plans to abolish the Supreme Building Authority and give more powers in spatial planning to local governments in municipalities. Representatives claim that this change will speed up the permitting process.
Back
Share
