Prague: There is no construction boom and far too few apartments permitted

According to current ČSÚ data, 3,252 new apartments have been approved in Prague since the beginning of the year. Once again, it appears that last year's record number of permitted apartments was merely an outlier. It was also aided by a halt in permitting housing construction in 2020 due to administrative issues related to the pandemic and their postponement until 2021. As a result, claims that Prague is experiencing a construction boom are untrue.

At the same time, according to the current Construction Barometer, which is part of the analysis by Central Group and KPMG Czech Republic, new apartments have the potential to be a new driver of the construction industry and significantly support the economy.

Housing construction permitted in the first half of this year could bring the Czech economy CZK 308 billion.
As a result, it accounts for nearly 40% of the total benefit of permitted buildings worth more than CZK 823 billion. New apartments also make a significant contribution to public budgets. Just the apartments under construction in Prague, of which there are over 134,000 according to our estimates, could bring in over CZK 180 billion in taxes and another billion in contributions to the city budget.

Even the people of Prague, where a lack of apartments and high prices has long been one of the capital's most painful problems, are aware of the need for more massive construction. According to a September survey conducted by the agency Ipsos using its Instant Research application, in which 1,000 people participated, more than 80% of people want more apartments built in the city and more investment in transportation facilities.
And we know from the pre-election debates that even the candidates for mayor are aware of the need for more construction.

However, faster permitting of apartments and, of course, ensuring sufficient land on which to build will only help the expansion of construction. The prices of new apartments could then be reduced by up to 15%. However, without a new ambitious spatial plan, and especially a new pro-development building law, Prague residents will not see any improvement. It was too late for that last year, which harmed both the country and the city.

Source: Central Group and KPMG Czech Republic