The CNB’s rate cuts and the Repair Grandma’s House programme have boosted Czechs’ interest in renovating and improving their properties. Very often they start with bathrooms.
The Czech National Bank’s interest rate cut has revived the property market. However, those who want to value their house or apartment and sell it well must in the vast majority of cases count on its renovation. In addition, given the available subsidy programmes, it can be expected that the interest in renovations will grow even more, and with it the demands on contractors, compliance with deadlines and quality of workmanship. People often opt for bathroom renovation first, which is both financially and structurally demanding.
Following the CNB’s intervention, mortgage interest rates are falling, which, together with the possibility of obtaining subsidies for the reconstruction of older houses in the Repair Grandma’s House programme, is bringing a major revival to the market. At the same time, demand for housing still far outstrips supply. According to the Czech Statistical Office, around 6,000 new flats were completed in Prague in 2023, but the actual demand is at least double that – at least 1,000 new flats per month.
The excess of demand is thus leading more and more people to take the path of reconstruction of existing housing. And this is also the choice of those who want to sell their flat or house in the future – the quality condition of the property will significantly increase the success rate of the sale. Properties in good condition, with a new bathroom, a well-preserved kitchen, an insulated facade and plastic windows do not stay on offer for long. On the contrary – for every fourth property, very often in a state “to be reconstructed”, the seller must give a discount of at least CZK 100,000 if he wants to sell.
Properties outside the big cities often require reconstruction.
Those interested in owning or investing in a property are increasingly looking – apart from Prague, where demand is outstripping supply – also at older properties in the regions. However, quality reconstruction often becomes a challenge, as the demand for reconstruction of flats and houses still far exceeds the available capacity of construction companies. We ourselves have seen more than 100% year-on-year growth in demand for bathroom renovation – from last year’s 15 million in turnover in this segment to this year’s 40 million.
Several factors are driving up demand. First and foremost is the increased comfort of owning one’s own home, with more and more customers investing in a new bathroom that will serve them for decades to come, rather than an exotic holiday. And then there’s the aforementioned major impact renovation has on the value and sale price of a property, which can increase by 15% to 20% if the job is done well.
So, in our studio, we often approach bathroom renovations not only from the perspective of existing property owners, but also buyers who are interested in how much the subsequent renovations will cost them. Indeed, bathroom renovations are among the most costly and pressing. After all, you can live without an insulated facade, but not without a bathroom.
Low-interest loans will also increase demand for renovations.
The capacity of construction companies this year and in the years to come will also be strained by the increased demand generated by the subsidy programme Repair Grandma’s House. For owners of flats and houses in need of reconstruction, this is a very advantageous way to ensure the appreciation of their property, even with the help of a loan bearing interest well below the current rates of Czech banks (approximately 3.5%).
We can expect that there will be considerable interest in state support for property reconstruction this year, as well as in the related turnkey reconstruction supplies. However, the increase in demand will undoubtedly mean implementation problems for companies that contract without being able to adequately ensure synergies with their subcontractors. For this reason alone, the utmost care must be taken in the selection of contractors and the control of the work carried out. This is the only way to meet the main objectives of the renovation – improving the quality of housing and the value of the property.
Author: Matouš Syrový, CEO společnosti Koupelny Syrový
