From January to May this year, 1,640 flats were permitted in apartment buildings in Prague, according to CZSO data, which is more than a quarter less than in the same period last year. At this rate, around 4,000 new flats would be allowed this year, ie only about 40% of what Prague needs every year according to expert estimates. Unfortunately, the low volume of new construction, which falls far short of the needs of the capital and the high demand for new housing, is a long-term phenomenon in Prague. In addition, the uncontrollably rising prices of construction work and materials have recently been added, which has resulted in a renewed acceleration in the rise in the prices of new flats. These are thus less and less accessible for ordinary inhabitants of the capital.
Unfortunately, the situation will not improve without more massive new construction. At the same time, there is a place to take, according to our latest analyzes, more than 123,000 new flats are in preparation in Prague.
In order for the situation to start to improve, several steps need to be taken to unblock new construction. And what are those steps? Adopt a new building law, unblock new construction on brownfields (on these there are about 2/3 of all planned apartments), redistribute funds collected from taxes on new construction in favor of cities and municipalities where they are built (Principle 10 + 5 – reduction of VAT at 15 to 10 percent of new flats, the remaining 5 percent would be transferred directly to the cities and municipalities in which new flats are being built in the form of a local fee), to clearly name the roles and rules for cooperation between investors, municipalities and city districts (with a reasonable amount of contribution by investors, which would not increase prices for final buyers) or define a strategy for the development of the city, including the needs of infrastructure (such as schools and kindergartens), so that it is not missing and thus does not block the development of the territory.
Source: Central Group
