A press release issued by Generali Investments during October shows that more than a quarter of Czechs have recently lowered their housing standards. The authors of the text, which we summarise for you in the FLAT SERVICE Advisor section, worked with data from the Instant Research tool by Ipsos, the consultancy Deloitte and the Czech Statistical Office.
Moving into a smaller place – a voluntary decision, or a necessity?
What does lowering your standards look like in practice? Apart from spending less on renovations, furniture, interior accessories or fitting out flats, it mainly involves a shift in how flat size is perceived, i.e. what an individual, a couple or a family accepts as comfortable. A concrete example? While five years ago tenants in Prague could rent a property measuring 65 square metres with the popular and practical 3+kk layout for 20,000 Kč, the unfavourable economic situation now forces them to make do with 16 square metres less. Yet flats of 49 square metres often have a 2+kk layout, which is not entirely practical for starting a family, for instance. Perhaps this is where we can look for the causes of the record-low birth rate reported by statisticians.
The Czech Republic is currently seeing 11% fewer children born than last year
Czechs fear energy prices, the report says
The driving force behind these moves is high energy prices – shown both by hard data and by the experiences of the survey respondents. It concerns not only gas and electricity, but heat as well. People are aware of this and are looking for options that are more economical not just in terms of space, but also in terms of the type of heating and the insulation installed. As a result of high energy prices, more than a tenth of all residents of the Czech Republic are reportedly considering moving to smaller or more cost-effective housing. This statistic correlates with another one that is highly alarming: one tenth of all Czechs also saw their housing costs rise year on year by more than a quarter, and roughly another 4% by more than half. This is partly due to the refixing of older mortgage loans taken out at far lower interest rates than those available on the market today. Some property owners have also come to the end of favourable energy price fixations dating back to the period before the start of the war in Ukraine.
The end of an existing fixation can bring a truly unpleasant surprise
Major changes to the support system, or the Super-benefit is coming
Many people try to fight rising costs and/or a falling standard of living through the so-called housing allowance, a social benefit currently drawn by almost 300,000 households. But significant changes are on the way. According to statistics, in the first half of the year alone the state paid out a total of 10 billion Czech crowns to applicants, which works out at some 1.7 billion crowns a month. Many of those drawing the allowance do not actually need it, as they are higher- or middle-income households. Such a system cannot be financed in the long run, and the Ministry of Labour and Social Affairs knows it. Once the details of the so-called Super-benefit are known – it should merge four different forms of assistance for lower-income residents into a single one – we will very likely devote a separate article to the topic. However, we cannot expect the changes to significantly ease the budget; according to Minister Marian Jurečka, they will rather be “budget neutral”. In plain terms, that means less money should go to people who (at least in theory) do not need it, and more to those who would find themselves in genuinely dire straits without social support. For now, though, it is not certain whether approval by the Chamber of Deputies and the Senate can still be achieved in 2024. A number of government bills are competing for the time needed for debate in the Chamber, for example the one raising licence fees. It will therefore be necessary to determine where the governing four-party coalition sees its key priorities. Do you rent out a residential property, or are you considering putting one on the market? You can easily avoid the complicated administrative duties and everyday worries – and save money in the process. Simply use the services of the experienced management company FLAT SERVICE. Contact us at sales@flatservice.cz or call +420 277 000 330. We will be happy to come and view your flat in Prague or the surrounding area.
