Prague has become a city where only the rich can live
Imagine a 30-year-old representative of a generation that three years ago, after years in a sublease, decided to invest in its own housing.
At that time, she paid two and a half million crowns for a seventy-meter apartment in a block of flats not far from the metro in a relatively lucrative part of Prague 6 – an amount she could afford to pay from her average salary.
Her peers, who have hesitated, are in a completely different situation today. Although they earn significantly more than she does, they often do not reach for a mortgage and therefore an apartment even if they live in a period of earning partner.
Four years ago, when the Prague representative movement YES, the CSSD and the Trojkoalice signed an agreement on cooperation in the leadership of the capital, they promised to address the housing issue. Among other things, they undertook to “support the construction of start-up flats for young families, for socially disadvantaged and disabled citizens, as well as the elderly”.
But it didn’t work out.
At the end of the government, the last Prague coalition to live in Prague will hardly reach any young families, socially disadvantaged or retired people. Even above-average people cannot buy their own or rented real estate in the capital.
In the last four years, the prices of new flats have exceeded an astronomical 100 thousand crowns per square meter. People now have to prepare at least seven million crowns for the mentioned 70-meter apartment.
“The current housing crisis is pushing the middle class out of Prague and this is starting to be a big problem. The middle class makes life in the city to a large extent, “says the head of the Institute for Planning and Development of Prague, Ondřej Boháč.
There are few old ones, new ones are not enough
At the same time, the improvement is not expected much in the coming years.
From the latest analysis Institute for Gas Planning and Development: Old apartments for sale are declining from year to year and the supply of new ones is not enough.
While in 2009 the largest domestic real estate portal sReality.cz registered over 16,000 older apartments for sale, in 2013 there were only 7,600. Last September, those interested could choose from less than 3.5 thousand offers.
Since 2014, when the Prague coalition began to rule, the development market has faltered, but even about 5,000 new housing units a year are far from enough. “According to our data, to meet the demand, about 8,000 new flats had to be built in Prague every year,” says Ondřej Boháč with a clear addition: “Every year it grows so significantly.”
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Privatization – and then back
However, the culprits cannot be found only in the outgoing coalition.
In the last decade, the central trend in Prague’s policy has been the privatization of the housing stock. Due to the expensive maintenance of apartment buildings and the vision of income to the municipal coffers, the individual city districts disposed of municipal flats in a large, fast and without a longer-term concept.
The city thus lost the only truly effective means of really influencing real estate market prices. And even the hand of the market to use the price in trading in apartments did not create – because the demand for apartments in the long run exceeds supply.
The ending management of Prague did not fully find out what it was like with the sale of municipal flats until the second part of the mandate. “In the past 4 years, the view of housing policy has been reconsidered, the result is the resumption of construction of municipal flats,” admits the municipality’s spokesman Vít Hofman.
The municipality has dusted off old projects; in the coming years, approximately 1,100 new flats are to be built in the complexes in Černý Most, Horní Počernice, Opatov and Prague 13, and future councilors will decide on their use.
“We currently own 8,126 flats, with the vast majority (except for the part of the housing stock leased in the form of a tender) being rented at rents lower than market rents,” adds Hofman.
Four years ago, when the current ending leadership took over the helm of Prague, the municipality owned over 9,300 flats.
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Evergreen development quotas
In 4 years, the coalition did not even take advantage of the opportunity that cities in developed countries often reach for in housing policy.
In many western metropolises, they take advantage of the opportunities offered by commercial development projects. There is a development obligation for part of the new construction flats to either be sold by the city or committed to offer them for less than commercial rent.
“Successful metropolises all use these tools, not one in Prague,” admits Ondřej Boháč from IPR.
At the same time, the management of Prague already committed itself to the introduction of so-called quotas for developers in the coalition agreement four years ago. “We tried to suggest it about a year ago, but there was no agreement in the coalition. The proposal did not even get the advice, “said one of the coalition representatives, who did not want to be appointed, to the List.
Now, for example, the CSSD promises quotas in the event of electoral success, but at the same time, according to information from the List, the CSSD was behind the collapse of the said proposal.
Air locks Airbnb
Lack of opportunities where the inhabitants of Prague could live for affordable money, then the owner in the years of the last coalition highlighted the new business of shared housing Airbnb, where they simply and quickly rent apartments for a short time.
The possibility of having a much higher earnings from renting an apartment led to the fact that a significant volume of real estate disappeared from long-term offers.
As many as 80 percent of the flats that owners in Prague now offer via Airbnb are used only for the purpose of short-term sublets and no one lives in them. According to February this year, there were about 7,200 Airbnb providers in Prague.
The management of the capital has been trying for several years to give the accommodation variant of the shared economy in Prague some of the barriers that are already common in foreign metropolises. Only now, just before the election, the council has approved a concrete plan.
It wants to initiate an amendment to the law, which sets clear rules for providers of this type of accommodation and will give municipalities, among other things, the opportunity to further regulate them by decree.
Some European capitals, such as Berlin, have already banned Airbnb altogether. Others limit the number of days the landlord can offer apartments in this way, while others clearly define the part of the year when they can rent apartments via Airbnb.
Easy promises vs. difficult reality
Even now, the parties have many pre-election promises to make housing available again: They want to increase the municipal housing stock and repair the existing one, speed up the part of the construction procedure that depends on town halls, open new territory and old fields for construction, help the young mortgage guarantee or straight home loans. And, of course, oblige developers to leave some of the new flats to the town halls.
If developers and urban planners agree on one of the main causes of the shortage and record housing prices, it is a bad building law – more precisely, its 2006 amendment.
According to her, every builder needs the consent of the local government and at the same time the state represented by the relevant building authority. According to Ondřej Boháč from IPR, this “dual system” is the main winemaker of why apartment buildings in Prague are being built so slowly.
“Some people are doing business by blocking the permitting process. Not all activists, but some do. At the same time, someone in the office is doing business with them, saying: I have four thousand projects in line here, which you will give in order to put you in front of you. Everyone who can do it a little bit makes a living from it, and that keeps stretching, ”he says.
Developers themselves can also do much more than before. “Some investors will present a project that they do not intend to back down from. And if the city officials do not like it, they will let the project be and wait to see if the next representation will not be more accommodating to their absolute and often burdensome plans for the environment, “said one of the mayors of Prague, who did not want to name.
Even all the pre-election promises of municipal politicians would turn into reality, according to experts, it still does not bend downwards with housing prices in Prague. Ideally, at least eventually their current rocket growth will stop. However, according to economists, a real proposal for real estate prices would probably bring about a more serious economic crisis.