Prague housing crisis impacting “more people than it used to before”, says expert
A recent study that analyses the housing situation in Prague revealed that the country’s real estate market is the least affordable in Europe. Factors such as privatization and a lack of growth in real wages have put an increasing number of residents in an insecure position. To learn more, I spoke with one of the editors of the study, Václav Orcígr.
According to this survey – Prague is the most unaffordable city in Europe for housing. Housing prices have risen by 50 percent while wages have only gone up by 21 percent. Can you tell me a little bit more about what the study has revealed?
“The study is quite complex. We tried to gather data that is recent and up to date regarding housing affordability in Prague. The main data sources are either international surveys or local Czech surveys from the Czech Statists Council, Deloitte, or the Institute of Planning and Development. There are about 200 sources that were used in this publication.
“Exactly as you said, the most important outputs of the report are the data summaries about the rise in housing prices compared to real wages, which have decreased by 15 percent – it’s quite alarming. Other than the data summaries, we tried to focus on individual segments of housing, because housing doesn’t only mean private developments, it can also be public housing which is extremely important when trying to deal with a housing crisis.”
“We also focussed on rental housing, and tried to summarize potential future risks. There is an extensive summary of recommendations that is divided into ten individual topics, and within these topics we tried to find out possible steps to implement in order to make the unaffordability less of a burden for Prague inhabitants.”
It’s great that there’s so much data on the housing situation but on a more human level, how is this impacting the residents of Prague?
“That’s a great question, because the biggest rise in prices have happened within the last five years, so the situation has rapidly changed in a short period of time. On one hand, it’s still a consequence of post-revolution privatization, which means that most of the housing is privately owned, and the municipality has a shortage of ways they can regulate it.
“The situation impacts more people than it used to before. Now the middle class has problems securing affordable housing for themselves. In Prague 70 percent of housing is owned privately, and people can no longer afford to buy a flat for themselves, so we expect that more rental housing will be constructed. But this may cause a problem within the segment of rental housing – increased prices in rentals, further gentrification, and the displacement of lower classes. This is very dangerous, that people with lower wages may need to move out of the broader centre, or even Prague.”
That’s something that really stuck out to me from the report – that 45 percent of Czech households who are renting spend 40 percent of their monthly income on rent every month, that’s more than double the EU average. That’s quite an astonishing number.
“Exactly, people living within rental housing are those that are endangered by the crisis. And it’s not only about the prices, it’s also about the rental contracts which are very often for one year only. Security of rental housing and of the tenants is relatively low compared to other European cities.”
Going off of that point, are there any cities in Europe that are doing a good job with their housing market that Prague could look to as an example?
“Definitely, one of the big examples is Vienna. Vienna of course is in a completely different situation because within the past 100 years, the city has been very active with its housing policies, and has kept a significant amount of flats and apartments in municipal ownership, so it’s not tied to the private market. Prague is in a completely different situation because of the privatization of the market. One of the goals and tasks that is in front of Prague is to construct municipal apartments, and negotiate with private developers to get shares of public or subsidized housing within privately constructed projects. This is a very common practice in Vienna, but also other European cities as
