Saturday, 15 March 2025
Residential construction across the Czech Republic continues to decline, with fewer flats being built and completed compared to last year, according to new data from the Czech Statistical Office (ČSÚ)). The downturn, evident in most regions, contrasts with Prague, where construction activity is on the rise and flat sales are increasing. Despite this uptick, experts warn that housing affordability in the capital remains a critical issue.
In August, construction output across the country increased by just 0.4%, with a notable drop in civil engineering projects, including apartment buildings and offices, which fell by 2.3% year-on-year.
“Prague is experiencing a surge in construction, with nearly 5,000 new flats started this year, marking a nearly 50% increase compared to the same period last year. However, it remains the most undersupplied and expensive market in the Czech Republic, exacerbating housing affordability,” said Petr Dufek, an economist at Banka Creditas. Dufek also noted that while Prague’s boom might spread to other regions, construction challenges could still hinder progress.
According to the CSO, 2,753 flats were started nationwide in August, an 11.3% decrease from the same month in 2022. The number of completed flats also fell by roughly 20%, reaching 2,238 in August. Since the beginning of the year, the overall decline in flat construction has been less severe at around 6%.
Jan Vejmělek, an economist at Komerční banka, attributed the decline to weaker construction in family houses, which dropped by nearly 25% year-on-year, while the number of completed flats in apartment buildings fell by a smaller 1.5%.
In contrast to the national trend, the Prague market is seeing a recovery in sales. “In the first half of this year, 3,500 new flats were sold in the capital, a year-on-year doubling,” said Michaela Vaňková, executive director of the Central Group development company. She added that deferred demand and supply, particularly projects that were economically unfeasible over the past two years, are now returning to the market. Additionally, the rise in flat sales has been supported by a record increase in the number of mortgages granted.
Alongside new developments, interest in property renovations is also expected to grow. According to Ondřej Boreš, public affairs manager at Velux, many flats and houses across the country are outdated, with the average age exceeding 40 years. Boreš believes that current adjustments to subsidy programs focused on sustainability and energy efficiency could help drive the reconstruction of older properties.
However, the broader outlook for the housing construction sector remains uncertain. Fingood’s chief operating officer, Ondrej Kozel, warned that expensive financing continues to weigh heavily on developers. “Higher interest rates, coupled with stricter bank requirements for guarantees, are making it increasingly difficult to finance new projects,” Kozel said, adding that builders are now seeking alternative methods to fund construction.
The housing sector, particularly outside Prague, could face stagnation this year unless financing conditions improve, experts suggest.
Source: CTK
