Prague has the least affordable housing in Europe, the solution is also political

Prague has the least affordable housing in Europe and an increase in private construction alone will not change this, political measures are also needed. This is according to an analysis presented today by representatives of non-profit organisations dealing with housing issues. According to them, the situation has deteriorated significantly in recent years, despite the measures taken by the Prague City Council, and they propose solutions such as more municipal construction, rent regulation or progressive taxation of investment flats.

The study was co-authored by Arnika, Re-set, the Platform for Social Housing, the Tenants' and Tenants' Initiative, and Sustainable Housing in the Centre of Prague. "Despite the policies in place, the housing crisis has deepened, and deepened fundamentally, and Prague is now the city with the most unaffordable housing in Europe," the editor of the publication, Václav Orcígr of Arnika, said today.

The authors base their claim on an analysis by Politico from the end of last year, according to which it takes about 25 years of average net income to buy a 75 square meter apartment in Prague. According to the co-author of the document, analyst Nina Fabšíková, over the past five years the price of apartments has risen by 50 percent and rents by 30 percent, while nominal wages have risen by 21 percent and real wages, taking inflation into account, have even fallen by 15 percent.

According to the document, up to a quarter of Prague households spend more than 40 percent of their income on housing. According to Barbara Bírová, director of the Platform for Social Housing, the crisis is hitting the most vulnerable groups the hardest. In Prague, she says, 160,000 people are at risk of losing their housing. "Children alone represent almost 40 percent of all people in housing need in Prague," she said. She added that another group at high risk are senior households.

The authors of the analysis counter the claim that improving conditions for private construction is enough to improve housing affordability in the Czech capital, which is usually argued by developers in favour of simplifying permitting processes. "The dominant narrative of little supply requiring massive deregulation is too simplistic, according to our analysis," Orcígr said. The authors of the study argue, for example, that the supply of apartments in Prague relative to the population is the same now as in 2011, but prices are double. Supply is thus only one of the factors that affect housing affordability, according to the study.

The study contains recommendations for politicians on how to tackle the housing crisis. They include, for example, expanding the city's housing stock, which now accounts for about five per cent of housing in a metropolis of about 31,000 apartments. In addition, the authors say the city should be more ambitious in dealing with so-called contributions, i.e. contributions from developers to local governments to build infrastructure. According to Orcígr, these can also take the form of a portion of the flats going to the city.

Among other possible instruments, the study mentions, for example, examining the possibility of regulating the growth of rent prices, which can be inspired by foreign countries. With regard to the influence of speculation on property price growth, the authors suggested introducing progressive taxation of large owners, foreign investors and empty flats.

Source: CTK