International Property News

Czech Property - Construction of new flats down 5.7% in Q3

19th November 2009

Building companies in the Czech Republic started the construction of 11,234 flats in the third quarter of 2009, a year-on-year drop of 5.7 percent, the Czech Statistical Office (CSU) said Thursday.

The largest number of dwellings that started to be built in the third quarter was recorded for flats in family houses, but their number fell by almost one-fifth year-on-year to 5,291. The total value of new construction orders decreased by 26.4 percent on the year.

Vaclav Matyas, president of the Czech Association of Building Entrepreneurs, said unwillingness among banks to lend money for new projects to builders is the biggest obstacle to housing construction.

There are no signs that developers' access to loans would improve in foreseeable future, Matyas said.

"The decreases will certainly not stop and will continue," he added.

Statisticians also recorded a drop in the number of flats in extensions to family houses.

"For all other categories a growth was reported compared to the corresponding period of 2008. The number of dwellings started in multi-dwelling houses increased (+8.7 percent) compared to Q3 2008; construction of 4,080 dwellings was started," the CSU said.

Ondrej Novotny, an analyst from international consulting company King Sturge, said the figures on started construction were a surprise.

"Considering that demand for new homes is currently still rather weak and cautious, the increase in construction of new flats in multi-dwelling houses is puzzling," Novotny said.

The volume of granted mortgage loans continues to drop and it can be expected that the number of built but unsold flats will rise, he added.

The average floor area per a flat started in new construction was 125.6 square metres and the approximate value was Kc22,400 per a square metre.

A total of 8,720 flats were completed in the third quarter, a drop of 8.8 percent compared with the same year-ago period.

The largest number of completed flats (4,062) was recorded for dwellings completed in family houses, down 9.7 percent year-on-year. The number of flats in multi-dwelling houses decreased by 5.4 percent to 3,261.

Only flats in extensions to multi-dwelling houses and dwellings completed in residential and nursing care homes registered a growth, statisticians said.

Planning and building control authorities granted 30,557 building permits in the third quarter, a drop of 9.6 percent on the year.

The approximate value of permitted construction projects rose by 12.2 percent to Kc118.8bn. The approximate value of permitted construction increased for environmental construction and for other construction. In contrast, the approximate value of non-residential buildings and residential buildings decreased.

The monitored building companies signed 9,746 new construction contracts in the third quarter of 2009, an increase of 9 percent on the year. The average value of a new construction order fell by 32.4 percent year-on-year to Kc4.6m.

Construction companies with 50 or more employees registered 11,200 contracted orders at end-September. These orders represented a stock of work to be done worth Kc176.1bn.

Of the total value of domestic construction orders at the end of the third quarter, public orders accounted for Kc123.3bn and private orders for Kc39.3bn.

Source: Prague Monitor