Urban planning in Brno is in crisis, the city is being harmed by suburbanization

Brno - There was record interest in apartments in new buildings in Brno last year, with people spending nearly five billion crowns on them. A total of 1507 new apartments were sold in Brno last year. However, this also went hand in hand with rising prices; apartments in Brno increased in price by nine percent to almost 59,000 CZK per square meter.

Due to issues with permitting new constructions and urban planning in Brno, few are being built, resulting in a shortage of apartments. Property prices are therefore rising in 2017 as well. According to experts, it is clear that housing prices will not continue to rise indefinitely, and people will start to look for housing outside the city in greater numbers.

This is already happening, according to Tomáš Kaláb, Vice Chairman of the Association of Brno Architects and Builders. "The urban planning of the city of Brno creates so many restrictions and uncertainties for investors that it is easier for them to invest beyond the city limits," Kaláb told ČTK. According to him, those interested in housing are willing to go outside of Brno for lower prices. "In the long term, such intense suburbanization will disproportionately burden Brno's infrastructure," he said. His company, for instance, has raised prices by up to 32 percent per square meter in Slavkov near Brno compared to 2013.

Compared to 2015, the number of sold apartments in new buildings last year rose by 63 percent. Those interested in new apartments often took advantage of very favorable interest rates on mortgages, which were at minimal levels for most of the year. "Paradoxically, it is also the current rise in mortgage interest rates that helped drive the high sales figures last year. In the fall, people wanted to take advantage of the last offers for mortgages with low interest rates and invested in housing," said Alexej Veselý, director of the company Trikaya.

Last year, people most frequently sought housing in the city districts of Slatina, Bystrc, Královo Pole, and Brno-střed. They primarily purchased two-room apartments, but there was also significant interest in one-room apartments. People most often acquire them as investments and further rent them out. In the upcoming months, the most apartments will likely be sold in the city districts of Jundrov and Slatina, which currently offer the most.

The most expensive apartment sold in 2016, according to available developers' price lists, was a five-room apartment in the city center, purchased for nearly 14 million CZK. Conversely, the cheapest was a one-room apartment on Cejl Street, where the buyer paid just under 1.2 million CZK for 17 square meters. Overall, the cheapest apartments are in the city districts of Slatina and Bystrc, where buyers paid an average of 47,000 CZK per square meter for housing last year.

The current average price of offered new buildings is around 59,000 CZK per square meter, which is nine percent higher than last January. An average two-room apartment of 60 square meters thus costs 3.5 million crowns in Brno. Someone interested in a one-room apartment usually needs to prepare more than two million crowns.

According to experts, the Brno market could be significantly influenced in the coming year by the realization of some of the long-prepared larger residential housing projects. This primarily involves extensive brownfield sites with the potential to build several hundred apartments - in the area of the former Zbrojovka, in Černovice, or in the area of the Jaselská barracks. Developers are also planning construction in Brno-Chrlice. In total, there will be 655 apartments in 62 family homes and 36 smaller apartment buildings. It is not yet clear when construction will start; however, the investor has already begun laying gas connections.