Flood of new residents drives Prague’s housing crisis

Prague's housing crisis

Robert McLean

#cee, #proptech, #development a #architecture

When it comes to understanding Prague’s runaway residential prices, a local urban myth keeps getting in the way: that 10,000 people are moving into the city each year. It sounds impressive, but it’s not even close. Because in actual fact, around 40,000 people arrive in Prague every year, while another 30,000 leave. Martin Červinka of the Prague Development Company says it’s this constant churn of people that helps explain the insatiable demand for real estate here. It seems safe to assume that if 40,000 newcomers managed to secure a place to live in the city, thousands more may have failed to do so.

Prague population

Prague’s real population, as captured by mobile phone data

In fact, Červinka thinks real estate experts and city planners alike continually underestimate the size of Prague’s housing crisis. And the reason is the lack of accepted, transparent data. To start with, the official number of people registered to live in Prague is far lower than the real number. The Czech Statistics Office official figures put the size of Prague’s population at 1.33  million. But the real number is roughly 1.57 million, says Červinka. He knows this thanks to granular data provided by an analytics company that’s been tracking and evaluating mobile phone location data since 2018. (Červinka credits Deputy Mayor Petr Hlaváček for getting the city to order the data sets are ordered annually and says it’s positive that Prague city hall officials have learned to use these numbers.)

Whereas the stats office takes a census once every ten years, this data provides day-to-day updates on the number of people that are in the city. The depth of the data is seriously impressive, as it’s able to track and distinguish between multiple cohorts.  For example, it can tell how many people spent more than 200 nights in Prague in consecutive 12 month period (making them residents), how many spent 10 or fewer nights (tourists only), how many spend only the day in town (commuters) or even how many are gone during winter and summer vacations (students, generally). Again, the real number of residents to keep in mind for the city is 1.57 million, more than 250,000 greater than the official statistics.

Central Bohemia

The number of people coming to the city is interesting, but what about 30,000 that leave each year? Where are they going? “Two-thirds of them are moving to Central Bohemia,” says Červinka. Some are genuinely interested in owning a home outside the city, but the reality for many others is simply that they can’t afford to buy a home in it. In fact, skyrocketing land prices means that duplexes and row homes built on small plots are now a major trend.

Along with the flood of ex-Prague residents, mobile telephone data illustrates how the official census figures fail to capture Central Bohemia’s real population. Rather than just 1.39 million people (the official figure), the more accurate figure appears to be 1.46 million. Given the tendency of people living just outside Prague to work within it, this is a crucial bit of information for transportation planners to understand. After all, the official combined population of Prague and Central Bohemia is 2.7 million people. But the real number is 3 million. The growth of the combined regions is frightening, even by official standards. In 2000, the combined population of Prague and Central Bohemia was just 2.2 million.

But population growth within the greater metropolitan region isn’t the only reason new flats are in such critically short supply. Because even if no one were moving to Prague, the quality of the housing stock here is improving as residents become wealthier. One indicator for measuring this is the number of people living in one flat. The average figure in Prague is 2.15. By contrast, in Munich, the average is just 1.85 per unit. In other words, mathematics dictates that the number of apartments in Prague simply have to grow. And that it has a long way to go.

Červinka points out another way the lack of new supply expresses itself: a total lack of new supply in some neighborhoods. In 2015, when just 2,500 units were completed, a closer look at the statistics shows that 1,000 of them were built in Vysočany – Prague 9 and another 500 went up in Stodulky. Some districts, however, saw barely any new construction at all, raising the level of demand for existing flats in them. In general, pressure on prices would have been bad enough even if new supply were spread evenly around the city. But with such disproportionate imbalances between supply and demand in specific neighborhoods, rapidly rising prices was the only outcome from the beginning. On the bright side, Červinka says construction on more than 5,000 new dwellings began during Q1-Q3 2021. Again, he credits the activities of Petr Hlaváček with helping to break through the planning logjam.

Note: The mobile data in these studies is carefully classified and calibrated to avoid duplicity, SIM cards in automobiles and various equipment 

 

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