Housing Standards 2007/2008:
The Factors behind the High Prices of Owner-Occupied Housing in Prague

4.1 Demand factors

4.1.3 Intergenerational and family assistance

What could be an accompanying factor behind the high ‘ownership deficit’ in the CR is the considerable assistance young people traditionally receive from their wider family to help them buy their own housing; Czech families more than families in other countries are willing to sacrifice their own consumption in order to financially help their children to buy their own housing. The Housing Attitudes 2001 survey revealed that when financial resources were required to buy housing, then assistance from parents or relatives or an inheritance was the most important source of these financial resources in 16% of the total number of recorded moves, and 24% of the number of moves when financial means were needed in order to get new house or flat (in some cases respondents obtain their flats or houses for free). In the case of those respondents who planned to move within three years of the time of the survey, roughly 17% were relying on assistance from their parents, relatives or an inheritance as a key financial source in order to be able to buy their housing. This was not, however, limited just to first-time buyers.

In the First-time Buyers 2007 survey respondents (first-time buyers in Prague) were also asked about the extent to which their parents provided them with financial assistance. In the survey 55% of first-time buyers indicated that their family or relatives helped them out financially to buy a flat and often they received a substantial amount of assistance. More than one-half of first-time buyers in the CR obtain a ‘financial injection’ from their relatives when buying a flat, on average in the amount of 25–35% of the total purchasing price (or construction costs). Although the absence or unavailability of relevant data for other countries means that it is impossible to evaluate this phenomenon in an international comparison, the proportion of buyers receiving such assistance in the CR is indeed large and in sum a relatively large extent of ‘intergenerational distribution’ is involved. The strong willingness of parents and grandparents to contribute to help their offspring buy their own housing may also be behind the relatively strong demand for owner-occupied housing in the CR.