In March, the authorities in Prague approved 568 new apartments. Since the beginning of the year, there are a total of 1,420 new apartments for the city. The good news is that the authorities are giving building permits more quickly this year – last January to March they gave a stamp of 1,027 flats, which was almost 400 flats less. At the current rate, almost 6,000 flats would be allowed this year. Unfortunately, there is still no reason to be optimistic. It is at least 4,000 less than the city needs according to the IPR study by Prague and CTU.
At the same time, construction and, to a large extent, housing construction are of great importance to the budget and are the driving force of the entire economy. Thanks to the multiplier effect of construction, every crown invested in it will return to the economy three times. Only residential buildings allowed in the second half of last year have the potential to bring over 303 billion crowns to the budget. Compared to the previous half-year, this is an increase of 30%, even 55% year-on-year. Residential buildings permitted in Prague have the largest share in this benefit (26%). This is shown by the so-called Barometer of housing construction, which is part of the analysis of Central Group and KPMG.
In Prague, over 130,000 new flats are stuck in various stages of the approval process. They would not only be able to help solve the current housing crisis, but they would also bring more than CZK 170 billion to the tight state budget, and only for VAT. The state earns a lot from every apartment built. In Prague, the public administration collects an average of more than CZK 1.5 million from each new apartment.
Construction is the key to the crisis. It can heal both the covid and the war-torn economy. The new government should therefore do everything to speed up and, above all, simplify construction. Many changes to the newly approved building law and prolonging absolute uncertainty harm the state itself.
Author: Central Group
