In July, according to the current data of the CZSO, only 279 new apartments were approved in Prague. From January to July, there were 2,594 new apartments for Prague. Only around 4,400 apartments would be permitted for the whole year, which corresponds to the average permitted in the last 5 years. At the same time, more than 134,000 apartments are under construction in Prague, which is housing for approximately 280,000 people. At the current pace, it would take over 30 years to permit the entire package of apartments in the metropolis. In Warsaw or Vienna, 2.5x to 3x as many apartments are permitted per thousand inhabitants as in Prague.
There is only one solution to the housing crisis – massive housing construction. Last year, a record 8,031 apartments in apartment buildings were exceptionally permitted in the metropolis, the most since 2007. But one swallow does not make a spring. Due to the deficit from previous years, it is necessary to permit and build at least 10-15 thousand new apartments per year, and this in the long term.
If more and more permitting and construction is done, then the prices of new apartments could be lower by up to 15%. Last year there was a record-breaking interest in new apartments in Prague. As a result, available apartments have almost sold out, leaving the fewest units on the market in modern history. Their acute shortage is one of the main reasons why prices are not starting to decrease. In the second quarter of this year in Prague, they increased by roughly 1/5 year-on-year.
Speeding up permitting would not only solve the housing crisis, but is also in the great economic interest of the entire country. The planned apartments in Prague alone should cost over 180 billion CZK. In times of crisis, it is therefore crucial not to stop investments, but instead to prioritize new infrastructure, including schools. Without securing it, housing construction cannot start.
Author: Central Group
