Fast rising prices of building materials reflected in Czech property prices

Rising prices and shortages of building materials are beginning to be reflected in apartment prices in the Czech Republic, the Czech News Agency reported, citing property developers.

Photo: Barbora Němcová,  Radio Prague International

Wood, plastics, metals and insulation materials are particularly scarce. One of the reasons for this is that the closing of borders last year in response to the Covid situation disrupted the normal supply chains.

Construction companies say that steel and insulation materials have gone up by as much as 100 percent year-on-year. The price hike has been even greater in the case of some wood products.

Renata Vildomcová, spokesperson of Skanska Reality, told the Czech News Agency that building materials were rocketing in price in a spontaneous, unpredictable manner in the tens and hundreds of percent.

It is naturally impossible to pass those additional costs on to a client who has already purchased a flat, Vildomcová said, adding that the matter would need to be resolved in negotiations at the level of suppliers and investors, who will ultimately pay these additional costs.

The CEO of developers Ekospol, Evžen Korc, told the Czech News Agency that fast rising prices of building materials, together with an increase in the price of labour and skilled work, were pushing up the prices of new properties.

Mr. Korc said that prices were also being driven up by the lack of building land, stemming from an exhausted zoning plan for Prague, and above all by needlessly complex building legislation.

Photo: Engin Akyurt,  Pixabay,  CC0

Michaela Tomášková, executive director of Central Group, said the global pandemic had hindered production and the market was now feeling the effects.

Wood, plastics, metals and insulation materials are often out of stock and construction firms can wait for months rather than weeks for delivery, she said.

A lack of permits for new flats, high demand for housing in times of uncertainty, cheap mortgages, a labour shortage and rising material prices are likely to cause real estate prices to rise further, said Tomášková.

Earlier this week consultants Deloitte said that average prices of apartments in Prague and major regional centres had increased by 19 percent in the first quarter of this year. This was the fastest rate of growth seen in five years.

Since the end of 2015 the average price of a flat in the Czech Republic has gone up by no less than 86 percent, Deloitte said.