Housing Standards 2003/2004:
Housing Policy in the Czech Republic - More Efficiently and More Effective

1. Housing shortage in the Czech Republic?

1.1 Spatial approach

The authors state that even when the spatial approach is used, the results of an assessment of housing availability may differ depending on concrete indicators used. The most common indicator used to capture the number of dwellings available to the population is the number of dwellings per 1,000 inhabitants. Less frequent is the indicator of the number of dwellings per 100 households or the number of residents per 1 living room in a dwelling or the living area of home per 1 resident. The above-mentioned indicators are aggregate indicators because they work with average values related to the population and the housing stock of entire countries. They are, however, simple, relatively well defined, relatively easily available, and therefore quite appropriate for comparing the housing situation over time or across countries.

The following figure shows how the availability of housing developed, measured by the number of permanently occupied dwellings per 1,000 inhabitants and by the number of permanently occupied dwellings per 100 households.

It is clear from the figure that during the entire monitored period the number of permanently occupied dwellings grew faster than the size of the population. This trend has been more or less stable and has not been interrupted even by the radical decrease in the number of newly constructed dwellings in the first half of the 1990s.

It is clear from Figure 1 that the number of dwellings per 100 households has barely changed in the monitored period (1930 - 2001). To put it better: the supply of dwellings available to households has even slightly worsened. At this point, it must be, however, pointed out that the number of households, unlike the size of the population, is a far less certain quantity. This is primarily due to the fact that it is not possible to define precisely what a household is. The definition of a household is always a matter of negotiation; it is always, to a certain extent, a socially constructed quantity (Paris 1995).

The optimistic assessment of the housing availability in the Czech Republic measured by the number of dwellings per 1,000 inhabitants could be supported with an international comparison - see Figure 2. In order to ensure comparability between countries in this case, the total number of dwellings also includes dwellings registered by local statistics offices as unoccupied. Therefore, the number of dwellings per 1,000 inhabitants in the Czech Republic is slightly higher than the number given in Figure 1.

It is clear from Figure 2 that the Czech Republic is an "average country" compared to other countries of the enlarged European Union. In a number of countries of Western Europe there are more dwellings per 1,000 inhabitants but the Czech Republic fares better compared to some Western European countries and all of the "Eastern" European countries included in this selection.

The authors claim that the indicator of the number of dwellings available to the population changes depending on which definition of a household is used. According to the indicator of the number of dwellings per number of census households the situation slightly worsened in the 1960s; in the 1970s and the 1980s it started improving and worsened again in the 1990s. A similar result is obtained when we use an indicator measuring the number of dwellings per number of households on common budget between 1971 and 2001. Surprisingly, the analysis shows that in 1930 the value of the indicator measuring the number of dwellings and the number of households on common budget was significantly higher than in the entire post-war period. This comparison shows that it is quite dangerous to use indicators based on the number of households to characterise the availability of housing to the population.

Figure 7 shows the number of dwellings per 100 households in selected European countries. In order to ensure comparability, total number of dwellings and total number of households on common budget were used for the calculations. Therefore, the number of dwellings per 100 households stated for the Czech Republic is higher than in the preceding figures.

It is clear from the graph that the number of dwellings available to Czech households is not in any way different from that in other European countries. In this respect, the Czech Republic is not an extreme.

The third type of indicators that can be used to measure changes in the number of dwellings and the housing stock available to the population are indicators that measure the size of a dwelling and the number of people residing in a dwelling. These types of indicators either express the size of a dwelling by the number of living rooms or an area of a dwelling in m². There is a slight complication due to the fact that it is not quite clear whether the total area of a dwelling or only the living area of a dwelling should be used for such calculations.

Figure 8 presents the average number of living rooms per dwelling and the average number of people per living room in a dwelling in the Czech Republic between 1961 and 2001. It can be seen that on average the number of living rooms per dwelling significantly increased over the course of the monitored period. Since the number of members of a household kept decreasing in the monitored period, the average number of people per living room quickly decreased.

Figure 9 shows the values of a similar indicator (this time the average size of a total area of a dwelling per residing inhabitant) in the Czech Republic compared to selected European countries. In order to ensure comparability, the total area of all dwellings in a country is related to the size of the population in such a country.

Although the average area of a dwelling per inhabitant in the Czech Republic is higher than in all the analysed post-communist countries (the difference is especially significant compared to Poland and the Slovak Republic), the indicator generally suggests that the Czech Republic lags considerably behind the analysed countries of Western Europe.

In view of the fact that the housing market is a regionally differentiated market, in the next portion of the text the authors turned their attention to assessing the availability and number of dwellings per 1,000 inhabitants in individual regions of the Czech Republic. Thus far stated average values have a tendency to veil some of the existing regional housing shortages because if we use national averages, housing shortage in one region can be partially balanced out by housing surplus in another, while in reality housing shortage in one region cannot be replaced with housing surplus in another. Results of the regional assessment will not be included here with a single exception.

The exception is an assessment of the relationship between availability and affordability of housing in individual counties of the Czech Republic. For the purpose of this comparison, three indicators were used: the number of permanently occupied dwellings per 1,000 inhabitants and the number of permanently occupied dwellings per 100 households censed in the 2001 Census and the ratio between the price of a "standard dwelling" and an average gross monthly salary in a county in 2001. The average price of a standard dwelling corresponds to a situation in November 2001 and pertains to the 1^st category dwellings (corresponding to dwellings in large housing estates), in personal or co-operative ownership, with an average age of approximately 30 years, wear down rate of approximately 40% and floor area of 68 m².

The result is captured in Figure 10 where counties in the Czech Republic were ranked in a falling order from left to right according to the number of occupied dwellings per 1,000 inhabitants. The left vertical axis is related to the data on the availability of the housing stock, the right vertical axis captures the values of the affordability indicator.

Looking at the figure it is immediately clear that the availability and affordability values are not mutually interdependent. This is also proven by the statistically insignificant values of the correlation coefficients.

There can be three reasons why the indicators of housing availability and affordability do not correlate at all in the counties in the Czech Republic. Either the theoretical economic assumption about the relationship between physical unavailability of goods on the market and prices is faulty, and these two qualities simply do not relate to each other; or inaccurate indicators of availability or inaccurate indicators of affordability were used.

The first explanation would in principle go against the economic theory and many empirical observations describing the functioning of the housing market in many countries. Although this explanation cannot be completely ruled out, it is the least likely one.

In view of the problematic definition of the number of households and the uncertain relationship between the number of dwellings and the number of households (in the sense of cause and effect), it is more likely that the regularly used indicators of housing availability do not measure well the actual availability. It is therefore possible that affordability indicators that are based on housing prices ascertained on the market provide more accurate information on housing sufficiency or shortage than housing availability indicators. Housing prices have the advantageous characteristic that they reflect various factors influencing demand (i.e., also those that we cannot well describe using other indicators or such about which we do not know they that exist). It can be however objected that calculations based merely on prices in the Czech Republic (as indicators of the housing affordability) also run many risks because the Czech housing market still falls victim to many deformations which reduce the reliability of information based on price indicators.