You will earn 16.4 years for a new apartment in Prague. Six months ago it was even worse
photo: Jan Svoboda, PrahaIN.cz/Idleness in Hodkovičky
According to the CG-Index of the development company Central Group, the availability of housing in the metropolis has slightly improved. I’m all for the pay rise. According to the latest published data for the third quarter of this year, 16.4 gross annual wages are needed to obtain a new apartment. For the first quarter, it was a record 17.3 annual earnings.
As ČTK reports, the change in trend is caused by faster wage growth. The prices of new apartments in Prague rose by 3.3 percent over the past six months, while wages rose by 8.9 percent.
“There is a certain positive trend here, and it is perhaps positive that accessibility has slightly improved after two years. However, the current more than 16 years for a new apartment in the metropolis is the second worst result for the entire period of the index,“ said the founder and head of Central Group, Dušan Kunovský.
Housing Affordability Index (CG-Index)
Central Group publishes on your website regularly per year, an indicator of how many twice the average annual gross wages are needed to buy an average 70-meter apartment in Prague.
The index works with data from the Information System Ministry of Labor and Social Affairs on average earnings (ISPV) and is based on prices resulting from a joint analysis by the companies Central Group, Trigema and Skanska. It shows much more precisely than other statistics the situation related directly to Prague, where the income and housing situation is completely different from the rest of the country.
The current published data of CG-Index worked with an average gross monthly salary in the metropolis of 54,849 crowns and the price of a new average 70-meter apartment of 10.8 million crowns. Half a year ago, the salary of residents of the capital was 50,363 crowns, and the purchase of an apartment cost 10.4 million crowns.
The situation can be improved by the new construction law and tax adjustment
According to Central Group, the key to improving the situation in terms of housing availability is the pro-development building law, its rapid implementation and simplifying the permitting of new buildings.
“New construction will be significantly helped if municipalities and cities receive more money from it for the necessary infrastructure. The most appropriate solution would be a minor tax adjustment based on the 10+5 Principle. This means a reduction of VAT on new apartments from 15 to 10 percent, with the remaining 5 percent in the form of a local tax going directly to the cities and municipalities where new apartments are built,” adds Kunovský.
Another solution is to increase the number of public rental apartments by exchanging unused public land and brownfields for apartments prepared by private developers.