137,000 new apartments worth almost 1.5 trillion CZK are currently being prepared in Prague. They could bring over 190 billion CZK to the state in VAT alone.
In the long term, however, an average of only around 3,500 new apartments are permitted and built in Prague per year.
The number of apartments under construction in the metropolis is continuously growing. Year-on-year, the number has increased by 8 thousand to 137 thousand. 60% of them are in Prague 9, 5, and 4.
The largest number of apartments (24%) are planned for the long term in Prague 9, where there is land that is not currently in development.
“Residential construction tends to be underestimated, yet its potential contribution to the economy is the largest of all segments of the construction industry. Slow permitting not only hinders the development of the entire country, but the state loses billions in taxes. He is profiting greatly from the new construction. Each new apartment in Prague brings the state an average of 1.5 million crowns in VAT alone,” points out the founder and head of Central Group Dušan Kunovský.
Last year, a record number of more than 8,000 apartments in apartment buildings were approved in the Czech capital – the highest number since 2007. However, in the first three quarters of this year, only 3,300 apartments have gone through the permitting process.
This means that by the end of the year approximately 4,400 apartments will be permitted. In order to improve the availability of housing, it is necessary to permit and build at least 10,000 apartments in Prague every year.
Compared to the surrounding metropolises, the pace of permits is the slowest in the Czech capital. In Warsaw or Vienna, 2.5 to 3 times more apartments are permitted per 1,000 inhabitants than in Prague.
Housing availability has improved slightly
Compared to the surrounding big cities, Prague is at the tail end when it comes to availability of housing.
While just 5 years ago, 12.7 annual gross wages were enough for an apartment in a new building in Prague, a resident would now have to earn 16.4 annual gross wages for a new apartment, if he/she had no other expenses.
A key step in solving the housing affordability crisis is a pro-development and stable construction law and its implementation is needed as soon as possible.
The solution is also to expand the number of public rental apartments by exchanging unused public land and brownfields for apartments from private developers or adjusting taxes in favour of the cities and municipalities where they are built (Principle 10+5)