Analysts: Building a house is cheaper than buying one

MgA. Gabriela Králová: Family House at Lipno, 2021 (construction supplier: 3AE s.r.o.)

Prague – Demand in construction should remain high despite rising prices. Purchasing land and building a house is cheaper than buying a completed property with similar parameters. The popularity of mobile homes is also increasing. This is the claim of analysts contacted by ČTK. According to data published yesterday by the Czech Statistical Office, construction production in the Czech Republic continued to grow year-on-year by 6.4 percent in January this year.

Production in building construction, which includes residential and non-residential buildings, increased year-on-year by 6.1 percent in January. The production of civil engineering, i.e., the construction of roads or telecommunications and energy networks, rose by 7.7 percent. Month-on-month, construction growth compared to December 2021 was 1.7 percent lower.

Economist Petr Dufek pointed out that when evaluating the January figures, it is necessary to consider last year's weak comparative base and the weather fluctuations that favored construction this time. "If there is anything that does not favor construction this year, it is the prices of building materials, energy, and fuels. Their sharp rise complicates the profitability of ongoing construction contracts and could even freeze some of them. Moreover, construction companies are still struggling with a shortage of workers," Dufek stated.

According to Dufek, the rise in building material prices will require renegotiation of contracts, especially in the public sector. "On the other hand, money from EU funds and additional grants and loans from the Union are expected to significantly flow into construction, so there should not be a lack of funds in this sector," Dufek added.

According to economist Štěpán Křeček, the purchase of land and subsequent construction of a family house is cheaper than buying a finished property with similar parameters on the real estate market. "This can sustain high demand in construction even in times of rising building material costs, labor, and mortgage loans," Křeček said.

In January, building authorities issued 6,751 building permits, which is 12.1 percent more year-on-year. The estimated value of newly permitted constructions reached approximately 33.5 billion crowns. The number of started apartments increased by 13.1 percent to 2,954. A total of 3,556 apartments were completed.

"Mobile homes are gaining popularity, which can be connected to utilities on building sites. Mobile homes are significantly cheaper than traditional brick buildings, yet provide comparable comfort. Although they have a shorter lifespan, they can be inhabited almost immediately after being brought to the site," Křeček further stated.