A new study by the Prague Institute of Planning and Development suggests
the Czech capital could face a sizable housing crisis in the future.
According to the report, which was quoted by news site iDnes.cz, the
city’s population will grow by 160,000 by 2030. To satisfy projected
housing demand, 8,000 new apartments would need to be built annually, a
representative of the institute said.
However, last year fewer than 5,300 flats were completed and developers say a log-jam relating to zoning and planning permits means the number will only decline further in the next few years.
On Monday, the Czech daily Deník N came out with a story that an official at the Russian Embassy is renting out hundreds of flats owned by the Czech state to tenants in Prague. The flats are available to the Russian state through a decades old agreement, but renting them to third persons may be breaking diplomatic rules.
The Russian Embassy in Prague has been profiting from the lease of hundreds
of flats in Prague 6 which were intended for Russian diplomats, Czech Radio
reported on Monday citing the news site Denik N.
The flats belong to the Czech state and were allotted to the Russian Embassy for its diplomats for an unspecified period of time before the fall of communism in 1989.
According to Denik N the flats are being leased to people without a contract and they are paying rent in cash directly to the Russian Embassy.
This activity is reportedly documented by a number of ads offering the flats for rent.
According to former Czech foreign minister Cyril Svoboda, it is in violation of the Vienna Convention on Diplomatic Relations.
The amount of property investment in the Czech Republic went down by EUR
2.62 billion in 2018, a cut back of 30 percent compared to the previous
year, a study by consultancy company Colliers International says.
Transactions also decreased by 27 percent. According to the authors of the
study this is a consequence of the low amount of quality property
investments currently on offer.
Colliers International says it expects this year’s investment rate to remain largely the same as in 2018.
Average rents in Prague rose by 3 percent last year to CZK 340 per square
metre, a slower pace than in the previous year, according to Trigema, a
The steepest average rise was in Prague 7 (11.4 percent) followed by Prague 1 (by 8.5 percent) and Prague 3 (by 8.1 percent).
The highest average rents were in the city centre, at CZK 433 per sqm in Prague 1 and CZK 389 per sqm in Prague 2. The lowest were in Prague 9 (CZK 299 per sqm) and Prague 10 (CZK 303 per sqm).
The number of available rental units in Prague fell by 15 percent year-on-year to 6,324 last year, according to Trigema.
The average price of new homes sold in Prague reached 101,091 crowns per
square metre by the end of 2018, an increase of 18.6 percent year on year,
a group of developers said on Wednesday.
The number of residential dwellings sold dropped by 9 percent to 5,000 last year, the lowest since 2012, according to data compiled by the developers Trigema, Skanska Reality and Central Group.
The most expensive flats are traditionally in Prague 1 (currently at 198,000 crowns per sqm on average) and in Prague 2 (164,000 crowns per sqm). The most affordable apartments are in Prague 4 and Prague 10, where the average price is 89,000 crowns per sqm.
In terms of price per square metre, smaller flats are more expensive than larger ones, regardless of location, the developers said.
Every third Czech lives in a „panelák“. These blocks of flats made of prefabricated parts are a typical feature of all the former Soviet satellite countries. They were built to last only for two or three generations. Now, their inhabitants are doing their best to prolong their life-span. However, they still pose a serious housing problem for the future.
The Prague City Council plans to raise rents on flats now leased out by the
municipality or city administration at below market rates, councillor Adam
Zábranský (Pirates) told the ČTK news agency in an interview.
Zábranský said the council plans to review the contracts of up to 10,000 flats, many of which are rented out at one-third the going rate “for no apparent reason”.
According to the developer Trigema, as cited by ČTK, tenants of city dwellings usually pay 60 to 120 crowns per square metre, so between 4,680 to 9360 crowns for a standard 78 sq m flat. The market rate would be above 20,000 crowns.
The rise in apartment prices in the Czech Republic, which has been extremely rapid in recent years, has come to a halt or at least decelerated, due to Czechs reaching the limits of their purchasing power as well as new mortgage regulations, iDnes.cz reported. However, things are rather different in Prague, the news site said.
In recent years, Prague has seen a surge in the number of people offering their rooms and apartments for rent. In fact, every fifth apartment in the downtown area is now rented out via Airbnb or similar services, according to a new study. But experts say fears of city centre depopulation may be exaggerated.