The Czech construction industry is experiencing a remarkable upswing, with production soaring by 11.6 percent year-on-year in May, marking significant double-digit growth in both building and civil engineering sectors. The Czech Statistical Office released these encouraging figures on Monday, highlighting the seventh consecutive month of year-on-year growth.
While statisticians attribute part of this impressive growth to a low comparative base, the monthly increase of 2.3 percent in May still signals genuine progress in the sector. March saw the most dramatic rise at 12.5 percent, before growth temporarily slowed to 1.9 percent in April.
“We’re witnessing gradually increasing construction activity,” notes Igor Forberger, managing director of building materials manufacturer Xella. “The market recovery is further supported by gradually declining interest rates, with mortgages becoming more affordable – average rates have dropped below five percent for the first time in three years. This is stimulating property purchases, new construction, and renovations of existing housing”.
Despite this positive trajectory, Forberger emphasizes that significant challenges persist. “The main issues remain the housing shortage and problems with slow building permit processes. These negative factors will continue to influence the market in the coming months,” he explains. “While the market will grow this year as we see increased interest from builders and growing demand, the growth rate will nonetheless remain moderate”.
To address the unfavorable housing situation, the building permit process would need to be dramatically accelerated. The market currently faces an annual deficit of tens of thousands of new apartments and houses, with demand for housing substantially exceeding supply.