- Hans Weber
- December 4, 2023
Housing Affordability Crisis in Prague Intensifies as Prices Rise and Saving Time Increases
Finding affordable housing in Prague has become increasingly difficult, and recent data indicates that the situation is worsening. According to a CG-Index report by the Central Group, it now takes the average Prague resident 16.6 years to save for a new 70-square-meter apartment, compared to 17.3 years in the same period last year.
Several factors contribute to the housing affordability crisis in Prague, including a slow permitting process, high construction costs, and expensive financing options. While faster permitting and increased construction could potentially lower new apartment prices by up to 15%, the current market does not reflect this trend. Instead, new apartment prices have risen by 4% over the past year and continue to climb.
In contrast, prices for older apartments have dropped, with panel apartments experiencing a 9% decrease and senior apartments dropping by 6%. This trend is expected to continue, leading to a widening gap between the prices of new and old apartments. According to the Central Group, new apartments are now up to 150% more expensive than those from 2015.
Prague has the worst housing affordability among its neighboring metropolises. Comparable apartments in Bratislava can be purchased with 14.7 years of wages, while in Vienna it would take 9.5 years, and in Berlin only 8.6 years.
In response to the crisis, the Central Group is calling for changes in the permitting process, lower interest rates, and cheaper construction materials. The group also emphasizes the need for more affordable housing in Prague. Currently, 140,000 new apartments are in the planning stages, with the potential to accommodate 300,000 people. However, the slow permitting process has limited construction to just 5,000 units in 2021, which is 3,000 fewer than the previous year’s record.
The housing affordability crisis in Prague has led to rising rental prices and limited availability. Rental prices have increased across the market, except in Brno. Additionally, the number of new construction starts has declined by approximately 2,700, according to the Czech Statistical Office.
In conclusion, the housing affordability crisis in Prague poses a significant challenge for residents, with rising prices and limited availability of affordable housing. Addressing this issue will require changes in the permitting process, construction costs, and interest rates. The Central Group’s report underscores the urgent need for more affordable housing and a streamlined permitting process to alleviate the growing challenges faced by Prague residents.
Article by Prague Forum