ISSUE #101

REAL ESTATE: Builders enjoying housing boom
New housing is increasingly affordable for hopeful home-owners. Last year alone, construction was commenced for 36,500 apartments, almost 9% more than in 2002, as well as the highest figure since 1990. Housing construction is supported by affordable mortgages and loans from building savings institutions, reaching nearly CZK 3 billion last year. Anticipated increases in assets, associated with the Czech Republic’s EU accession, is also a factor in the great interest in housing. Analysts say that demand for new housing should increase this year as well, with prices for new apartments rising further due to the higher VAT rate and stricter technical parameters following EU accession.

LEGISLATION: Authorities to allocate money from EU funds
As of 1 May, the date of the Czech Republic’s EU accession, state organizations and firms will be able to draw money from structural and cohesion funds, which are intended to level the economic differences between regions, as well as for environmental and transportation projects. During 2004-2006 the Czech Republic will be eligible to receive over EUR 2 billion total. At the ministerial and regional levels, bodies should be created to provide all the necessary information to applicants for money from European funds. “The ministry for local development is preparing the brochure on how to apply for funding and what is necessary to attach to the requirement,” says ministry spokesperson Petr Dimun.

COMMERCE. Fear of reforms affects spending
Since the beginning of this year, Czech consumers have radically changed their buying habits. Stores are reporting a year-on-year decline in revenues of 1.4%, with small entrepreneurs reporting the sharpest drops. According to the Czech Bureau of Statistics, the last decrease in revenues occurred during the floods of 2002. Motor vehicle sales recorded the sharpest drop, nearly 13%, with sales of new cars in January down 12% year-on-year, According to the Union of Automobile Importers, this is the worst result in the last five years. Consumers are cutting their expenditures mainly due to government reforms and high unemployment, mainly buying fewer luxury goods.






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