Prague has a record supply of apartments. So why are housing prices still rising?
At first glance, the situation looks optimistic. Currently, a record 157,000 new apartments are being prepared in Prague. This is the highest number in history. Nevertheless, the market situation is not changing much, as new apartments are still being added more slowly than the metropolis needs. As a result, prices continue to rise.
There are plenty of apartments on paper, the problem lies in construction
According to available analyses, the most new projects are being prepared in the city districts of Prague 4, Prague 5, and Prague 9, where there is space for the development of former industrial areas and other brownfields. However, the journey from plans to moving in often takes a very long time.
In Prague, approximately 5,000 apartments are approved each year, even though experts estimate that at least double that pace would be needed. As a result, a housing deficit approaching 100,000 apartments has been created over the last twenty years.
Prices are rising faster than wages
The lack of new construction is reflected in prices. The average price of new apartments in Prague has already reached approximately 182,000 crowns per square meter. For a typical apartment of 70 m², buyers will pay an amount equivalent to nearly 16 years of gross wages.
Over the last ten years, the prices of new apartments have increased by about 180%, while wages have only risen by just over 80%. This difference is one of the main reasons why owning a home is becoming increasingly unattainable for many people.
Hope? Faster construction approvals
One of the biggest topics in the Czech real estate market remains the speed of approval processes. The new zoning plan for Prague opens up additional development locations, but the actual creation of new neighborhoods will mainly depend on how quickly projects can be approved.
Unless construction significantly speeds up, the supply of new apartments is likely to continue lagging behind demand. This means that the pressure for price increases will not disappear anytime soon. For those interested in owning a home, the right timing and careful selection of location will remain crucial in the coming years.