Apartment construction booming in the Czech Republic
The Czech economy - at least in comparison with most of Western Europe - is booming, with four percent annual growth for 2004 - its fastest rate for eight years. This has been accompanied by a boom in the building industry. According figures published by the Czech Statistical Office more than 32,000 apartments were completed last year. This is highest figure in the country's short history since Czechoslovakia split twelve years ago. I talked to economist David Marek from the Czech investment bank Patria Finance and asked him what he believed had caused this boom.
"The reason there are very low interest rates is because of the Czech National Bank. It has influenced the whole yield curve, as well as long term yields that are closely connected with the mortgage rates. We can expect even lower interest rates in the next few months so financing flat purchases should be very favorable for families also this year."
Can you compare the situation for example ten years ago, or even twenty years ago, and now? How is the situation changing?
"The current apartments are not anymore in the old 'panelaks' but it is a more modern type of housing. The flats are bigger and better equipped. There are also less family members living in a flat. The flats now usually have about two rooms, whereas ten or twenty years ago the flats were somewhat bigger."
But regarding the mortgages; how easy or how difficult was it to get a mortgage 15 years ago in comparison with the current situation?
"Currently, there are the lowest interest rates for the past 15 years, so flat financing is the cheapest in the modern Czech history."
How about houses? There are not that many family houses being built in the Czech Republic, are there?
"It's connected with the situation on the labor market. The best chance to get a job is always in large cities, like Prague for example, and space for building family houses is limited there. So if people do not want to spend a long time traveling to work, they prefer to buy a flat in the city. So the demand for flats is much bigger than the demand for houses."
How expensive is it for a Czech family to buy their own flat - or to pay a rent - in comparison with some West-European countries?
What do you think about the prospects for the future? Do you think that this growth will continue?
"As for the latest figures planed for housing this year, we can expect even better figures in 2005 than in the last year."
