Residential construction in the Czech Republic continues to decline, with Prague being the exception.

Prague - Residential construction in the Czech Republic continues to decline. According to data released today by the Czech Statistical Office (CZSO) for August, fewer apartments started construction compared to last year, and the number of completed apartments was also lower. An exception is Prague, where more apartments are being built and sales are growing again. However, the availability of housing in the metropolis is still deteriorating, experts contacted by ČTK stated. According to CZSO, construction output in August slightly increased by 0.4 percent. This is due to a decline in civil engineering, such as the construction of apartment buildings or offices. Civil construction fell by 2.3 percent year-on-year in August.

"Prague is experiencing a construction revival, with almost 5000 apartments already started this year, which represents an increase of nearly half compared to the same period last year. However, it is also the most unsaturated market with the highest prices in the Czech Republic, and thus also with the lowest housing availability. The boom in apartment construction in Prague may eventually be followed by other strong regions, but it remains to be seen how much the results will be influenced by issues related to building regulations," said economist Petr Dufek from Creditas Bank.

According to CZSO, 2753 apartments started construction in the Czech Republic in August, which is 11.3 percent less compared to the eighth month of last year. The number of completed apartments recorded by statisticians was approximately one-fifth lower year-on-year, with 2238 completed in August this year. Since the beginning of the year, the decline has reached nearly six percent according to Dufek. The reason for the decline in new apartment construction is, according to Komerční banka economist Jan Vejmělek, weaker construction of apartments in family houses. This dropped by nearly a quarter year-on-year, while the number of completed apartments in apartment buildings was lower by 1.5 percent compared to last August.

According to Michaela Vaňková, the executive director of the development company Central Group, the number of sold new apartments is increasing this year. In the first half of the year, 3500 apartments were sold in the capital, which is double compared to last year. "As part of the recovery, pent-up demand is returning to the market, along with effectively pent-up supply, namely projects whose construction did not make economic sense in the previous two years," Vaňková added. With increasing sales, the number of provided mortgages has also reached a record high, according to her.

According to Ondřej Boreš, manager of Velux for public affairs, interest in renovations could also grow. According to him, the Czech housing stock is still outdated, with an average age of apartments exceeding 40 years. Apartments or houses built several decades ago do not meet current expectations for modern housing, he believes. "Current adjustments to subsidy programs aimed at modifications leading to more environmentally friendly and cheaper operation of buildings could also help stimulate renovations," Boreš said.

According to Ondřej Kozel, the operations director of Fingood, the entire residential construction sector could at best stagnate this year. The reason is expensive financing. Developers, he said, are not only dealing with higher interest rates but also with increased bank requirements for guarantees, making financing new projects impossible. Builders often seek alternative ways to finance their projects, he added.