Housing availability exacerbated by weak construction and low Czech wages – News

Expensive apartments represent one of the biggest problems that the Czech Republic is currently solving. Cities complain that it makes it difficult for them to attract the workers they need to operate. Therefore, independence or starting a family is complicated for young people.

In addition, the availability of owner occupied homes has started to decrease again in recent months. Average prices of apartments sold in regional cities across the Czech Republic exceeded 100,000 crowns per square meter in the second quarter of this year, according to data from consulting firm Deloitte.

So a 70-meter apartment model will cost more than seven million crowns. Part of the middle class has difficulty achieving this due to, among other things, mortgages that are consistently expensive.

“House and apartment prices in the Czech Republic are high in relation to income both because of the lack of new properties entering the market and because of a disproportionate level of income local,” said Michal Skořepa, an economist at Česká spořitelna. .

Other economists and real estate experts contacted by Novinky also cite low wages and a small number of properties going on the market as one of the main problems.

“We will not change the fact that we are building new apartments at similar costs to other Western countries. We are part of the European market. It’s like basic consumer goods or, for example, food,” said Milan Roček, CEO of Dataligence.

But what could improve the Czech Republic, according to experts, is the aforementioned construction. Data from the Czech Statistical Office also confirms that there is not enough increase in new buildings. In the last five years, between 35,000 and 45,000 apartments were built every year in the Czech Republic.

August data shows there may be even fewer new homes on the market this year than last year, when statisticians began counting 35,704 apartments. According to a study last year by the IDEA think tank at CERGE-EI, in order to reduce real estate prices, it would be necessary to build around one hundred thousand apartments per year.

Experts agree that too much bureaucratic burden is holding construction back. “Any new building has to meet countless legal conditions regarding overall height, number of parking spaces, environmental impact or fire regulations,” said Vít Hradil, Cyrrus’ chief economist. People’s efforts to block new projects near the block their residences.

In the last two years, these chronic problems in the Czech construction industry were also exacerbated by high construction prices and expensive loans, which had a negative impact on the ability and willingness of developers to intensify operations.

A lack of supply is now being met with ever-increasing demand. It is recovering after banks started lowering interest rates on mortgages. The decline is still not very significant. But people and investors want to take advantage of the opportunity, fearing that real estate prices will increase significantly in the coming months. Residential sales across the Czech Republic were 13 percent higher in the second quarter than last year.

UniCredit Bank economist Jiří Pour sees two main reasons why interest in apartments is growing again. In addition to Czech, the market also shows demand from foreign customers. “It does not depend on the average salary in the Czech Republic, but on, among other things, the wealth of foreign investors, the rental profit in the Czech Republic, foreign and domestic interest rates and the expected development on the koruna exchange rate. ,” said Pour.

Due to the low number of owner occupied houses, the rental market is starting to improve. The number of Czechs living in rented accommodation has increased from a fifth previously to the current level of almost a quarter.

Stronger demand has a direct impact on rental prices. In the last ten years, they kept up with the development of wages, but this year they began to grow faster. And the rent is expected to continue to rise.

Analysts agree that the rental market is also showing signs of a weak recovery. “If we do not build twice as many dwellings as we are building now, ie the same number for sale for personal property and the same number for rent, the availability of rental housing will hardly increase ,” said Roček.

Experts will also be skeptical of efforts to expand the city’s housing stock. City leaders and the government are focusing on this. Experts warn, however, that town apartments will only help a small number of people who get the opportunity to live in them at discounted rent from town halls.

If they are not at the expense of commercial construction, town flats could benefit at least in places where there are too few buildings or it is not profitable for private individuals to build there at all.