The availability of flats is the worst for the Czechs since the global financial crisis

The availability of flats is the worst for the Czechs since the global financial crisis

According to the December statistics of the Czech National Bank (CNB), average housing prices in the Czech Republic have approached 11 times the average annual income of the population. The reason is the widening scissors between the growth rate of income and housing prices during the current crisis. From the point of view of those interested in housing, it was worse for the last time in the summer of 2008, ie just before the onset of the global financial crisis. And the reversal of this trend will probably not happen so soon, the e15.cz server informed. "While household income growth has slowed, real estate prices have been rising," said Raiffeisenbank economist Helena Horská. She added that while average incomes rose by about 5% year on year in the third quarter, house prices have doubled. Dwellings in the Czech Republic were highly unavailable during the 2nd and 3rd quarters of 2008, when people needed 11.2 times their annual income for the dwelling. "The current situation is the worst in the last decade," said Libor Ostatek, head of the consulting company Golem Finance. The economic recession as a result of the pandemic suffocated only the growth of wages, on the contrary, the prices of apartments blew into the sails. "As soon as the CNB cut rates again to zero, many people began to see it as an opportunity to take out a mortgage at a relatively low interest rate before interest rates began to rise again," said Finez Investment Management analyst Jan Traxler. The apartments also served as a safe harbor. "In the crisis, people became more focused on the security of real assets and apartment prices rose due to the uncertainty caused by the pandemic," added Martin Mašát, an economist at the consulting company Partners. Significant reasons for the rise in house prices were also the loosening of the CNB's rules on mortgage lending, combined with fiercer competition between mortgage lenders and the fight for every new client. The abolition of real estate acquisition tax or the fall of interest on bank accounts worked in a similar way. The worst are currently available new Prague buildings. As follows from a December study by the development company Central Group, the average inhabitant of Prague earns a new apartment with an area of ​​70 m2 13.9 years, by far the most capital of all neighboring states in the Czech Republic. And as Jan Traxler added, he does not believe that anything fundamental should change in this trend in the foreseeable future.