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The rental flats will soon run out. Inflation and the influx of refugees are to blame

The apartments for rent are disappearing from the supply at the speed of lightning. The wave of refugees from Ukraine is mainly contributing to the high sales, along with people who can no longer afford a mortgage. It is no exception that dozens of people are calling real estate agencies for one advertised flat. Property market experts agree that without state involvement, the housing problem will not be solved.

“Last week alone we received more calls with demand for rent than in the whole regular calendar month,” says Lucie Veletová, rental manager at T2 Reality. Demand is concentrated mainly in large regional cities.

Jiří Plácal, director of Central Europe Holding, estimates that the capacity of the rental market in Prague will soon not be enough to meet demand: “Those who will need an apartment for children soon, I advise, rent it now, they may not be available in summer anymore.”

At least in larger cities, it is evident that rental prices will jump. But analysts had already predicted this before the outbreak of the war in Ukraine. Having to cope with inflation, rising fees and more expensive construction work, landlords increase prices with each new rental contract.

“The problem may be speculators who will overstate prices and probe what the market can bear. Because the owners of rental flats are mostly individuals, this can create a so-called unwanted cartel where expensive advertisements push individual owners to overshoot the price and create momentary overpricing.” Meyer points out.

Although the Czech Republic does not suffer from a significant shortage of residential properties in international comparison, a common problem is the poor condition of the housing stock. The average in the selected 16 European countries according to the indicator Property Index 2021 is 463 flats per thousand inhabitants. In the Czech Republic according to the same index, there are 463 flats per thousand inhabitants.

According to older OECD data, the Czech Republic has the largest number of potentially residential properties per capita in Europe, at 603 per thousand inhabitants. “Potentially residential” in this case means that they are not available at the moment, but after more or less major reconstructions they can be used for housing.

“If the demand persists, it is worth to renovate and rent properties that have been lying dormant and waiting for reconstruction. Here we come round to the mentioned OECD data,” explains Meyer.

But the renovation of these buildings is probably not without the help of the state. “I can imagine a positive incentive in the form of incentives that allow profitably to renovate dormant flats or even whole houses in exchange for compulsory rental,” stresses Meyer.

One of the variants of a rapid supply of accommodation is sometimes mentioned as modular construction. However, according to experts, such a solution is complicated. In addition to the renovation of the housing stock and the “revival of dead sites”, there will probably be a lot of lower quality offers on the market. “Tens to hundreds of “underground shelters” without windows will emerge, offered at the price of a standard studio apartment,” Meyer expects. This may push up the prices of standard spaces even higher.

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