Prague Housing Hit by Permit Delays: Planned supply stuck on paper

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Prague’s housing market presents a striking contradiction. More than 150,000 new apartments are currently planned across the city, marking a record level of development activity on paper. In reality, however, most of these projects remain frozen at the planning stage due to a chronically slow and dysfunctional permitting system. As a result, actual housing supply continues to lag far behind demand, leaving Prague with the least affordable housing among comparable Central European capitals.

Strong demand meets limited delivery

The Prague residential market has seen an exceptionally strong year. Around 6,000 new-build apartments were sold in the first three quarters of 2025 alone, with Central Group forecasting total annual sales of between 7,500 and 8,000 units. Yet the pace of new supply has failed to keep up. Ongoing difficulties in securing construction and planning permits have sharply limited the number of projects reaching the market, pushing prices for new apartments up by around 8% year on year — the steepest increase in the region.

Permitting as a structural bottleneck

Permits remain the central constraint. Only about 5,000 new apartments are approved each year in Prague, despite an estimated need for at least double that number. Over the past 20 years, this imbalance has resulted in a cumulative housing deficit of nearly 100,000 units. The situation worsened further in 2025, with fewer than 4,000 apartments approved in the first three quarters, the weakest result in a decade. In August alone, just 27 apartments were approved, enough to house roughly 50 people.

Affordability continues to deteriorate

Data from the CG Index highlights the scale of the affordability challenge. Buying an average new-build apartment of 70 square metres now requires 14.8 gross annual salaries. While this represents a marginal improvement on last year, it is still five annual salaries more expensive than in 2015, underlining the long-term erosion of housing affordability in the Czech capital.

Limited optimism around reform

There are tentative signs that the permitting process could improve in the future. Government plans and proposals to amend the new building law aim to accelerate approvals, particularly through procedural simplification and digitalisation. Even if reforms take effect from 1 January 2027 as planned, meaningful impacts on supply are likely to materialise only after several years due to the long development cycle.

As reported by International Investment experts, Prague’s housing crisis illustrates how regulatory inefficiencies can outweigh ambitious development pipelines. For investors, the outlook points to continued supply constraints and price pressure, while buyers face a market where scarcity is driven by structural, not short-term, factors.