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Housing Affordability in Cities in the Czech Republic

image of Housing Affordability in Cities in the Czech Republic

While the full effects of the COVID-19 crisis on housing affordability in cities in the Czech Republic remain to be seen, the pandemic has reinforced the urgency of tackling pre-existing challenges, such as a consistent shortage of housing supply in cities and structural obstacles for urban households to access affordable housing. While the Czech national government has taken a number of emergency measures to help people keep their homes during the COVID-19 crisis, this report recommends that Czech national and local governments need to implement both direct and indirect policy instruments more effectively to shape a more sustainable and inclusive urban paradigm. Direct policy instruments consist in targeting housing affordability specifically, for example by providing more social housing to households most in need. Indirect instruments such as local land-use planning can help increase the supply of affordable housing. This report also contains the results from an innovative survey that the OECD and the Ministry of Regional Development conducted on more than 1 800 municipalities to collect data on the housing market and housing policies at the municipal level.

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Overview of housing affordability in cities in the Czech Republic

House prices in the Czech Republic have soared faster than household disposable income, especially in cities where house prices have often risen at a faster pace than the national average. While the rise in house prices may benefit the large share of Czech homeowners, it has made it even harder for newcomers, especially the young, to get a foot on the housing ladder. With rents also rising and with relatively limited supply, the private rental market offers few alternatives for people struggling to find affordable housing. Many low- and middle-income households are therefore getting priced out of cities, or have no choice but to turn to substandard quality housing. While structural drivers pushing housing demand up in Czech cities are likely to remain despite the COVID-19 crisis, housing development does not happen where it is most needed, i.e. where demand for housing is highest, driving house prices up in Czech cities. Furthermore, Czech households bear a heavy financial burden by living in cities where the housing stock is often old and in need of energy efficiency improvements.

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