The state and cities are turning around. They plan to invest billions in new housing. The reason is a lack of apartments on the market
The high interest in living in the capital, which is dampened by a lack of apartments, is pushing individual city districts to new investments. That's why the metropolis plans to build thousands of additional units at its own expense in the coming years. The state also came up with a new injection - it promises the Czech Republic to provide tens of billions of crowns for the construction of new affordable housing.
Out of the original approximately 200 thousand apartments, which were owned by the city fund more than three decades ago, Prague districts currently take care of only about 30 thousand units. On one hand, this is definitely not much, as it is only approximately 4 percent of the total volume of the housing stock. On the other hand, this segment undoubtedly represents an interesting opportunity for potential residents, as well as for the municipalities themselves.
The number of municipal apartments is expected to increase
The opportunity for the development of municipal apartments is also offered because many of them are not suitable for living due to their poor condition. According to the latest study by the Planning and Development Institute of the capital city of Prague, their number, which are unoccupied in the city, is around two thousand.
For this reason, town halls are pumping tens of millions of crowns into their repairs. For example, in Prague 4, which is comparable in size to Ostrava, it is now about 40 million. In the second urban district, which includes a large part of the city center, it is even twice as much.
The city council wants to ensure affordable housing thanks to municipal apartments. Through its Prague Development Company, it plans to invest tens of billions of crowns in them. This would result in the construction of entirely new urban districts, which would satisfy demand much better than in the case of a few hundreds of newly renovated municipal flats. They should gradually rise, for example in the fourth, fifth and eighth district, and also for example in Dolní Počernice.
The apartments should also serve those who are in a difficult social situation or work in those companies and organizations that are indispensable for the functioning of the metropolis. These include, for example, policemen, firefighters, teachers, or nurses. It should be about thousands of new units.
"The need to increase the number of municipal apartments stems from a trend that is common for most of Europe. The availability of own housing is increasingly difficult. In our capital, the situation is extraordinarily complicated, similar to Amsterdam or Barcelona,"
The mayor Bohuslav Svoboda wrote for LP-Life.
Rentable housing is often a priority
The metropolis anticipates a large portion of such units will be rented. It is expected that this type of housing will also appeal to younger age groups who cannot afford to own a flat. Sometimes these are people who have rental experience in the West, which is a common part of the market there. For instance, the Austrian Vienna has been building rental flats for over 100 years.
The financial calculations speak clearly. According to calculations, the average monthly mortgage payment for an 80 percent mortgage for 30 years when buying a new apartment in our country fluctuates around 40,000 crowns. In contrast, the monthly rent reaches a third to half less.
Another advantage of rental housing is lower initial costs. While with rent, expenses of approximately 50 to 80 thousand crowns are expected, when buying your own apartment via a mortgage, it is necessary to have saved at least 20 percent of the property value. With current prices, this means having at least an amount close to 2.5 million crowns. Nothing dramatic changes about this even with the fact that for younger buyers up to 36 years, this boundary is reduced to 10 percent.
The State Promises Over 5 Billion
State has also entered the game. At the end of February, the government allocated 900 million crowns for the construction of affordable rental housing. Funds for specific projects can be drawn in the form of loans from the State Investment Support Fund. Legal entities and territorial self-governing units can apply for financial assistance.
However, this support should be much higher overall. It should be more than 5.1 billion. Of this, 3.2 billion is earmarked for subsidized loans and 1.9 billion for one-off grants.
According to the Minister for Local Development Petr Kulhánek, as he told ČTK, the money is intended for the first 64 projects, which already have a guaranteed building permit. The goal is for their construction to start this spring. It could be used for both new constructions and building modifications or extensions.
"The goal is to conclude contracts for the creation of approximately 2,000 new apartments by the middle of 2026, thereby helping to start their construction,"
Prime Minister Petr Fiala said in a press release.
The problems with affordable housing have been known for more than 10 years. But only now is the time coming for the state and municipalities to talk about specific programs that could change the situation.
Sources: own inquiry, ČTK, Czech Government, Prague City, selected city parts
