According to surveys, we are in second last place in the availability of housing within the EU. Only Slovaks are worse off. We hear that own housing is unattainable for many Czechs due to their incomes. A new apartment with an area of 70 square meters requires 13.3 of the average gross annual salary in our country. Low income levels and slow housing construction are cited as the main reasons. High mortgage interest rates also play a role.
I recently read an article where a banker evaluates the Czech Republic’s ability to finance the purchase of real estate. According to him seven out of ten Czechs in 2022 and 2023 bought real estate for cash. Only 30% of transactions were financed through mortgages. People with a financial cushion took advantage of last year’s drop in property prices.
I wonder how this is possible? Are we really as bad with the unaffordability of housing as the surveys show? Maybe add that those who buy with cash are not mostly young people. They were waiting for the relaxation of mortgage limits from the CNB and a reduction in interest rates. It is gradually returning to the real estate market. It logically follows that people who are able to finance a mortgage from their own resources are people of middle to older age. That is, people who approach the purchase of real estate more like k investment. In general, we Czechs are burdened by property ownership. By buying real estate, if we don’t have real estate for our own housing, we are essentially pushing prices up.
Who is pushing property prices up?
What is the profile of a person who is able to pay several million from his own resources? Who managed to save so much? It is someone who must have a high income or was lucky enough to inherit something. People working as commuters definitely have an advantage. With a German salary, they have a certain advantage in the real estate market. Another privileged group can be capable entrepreneurs with “We do not accept cards” signs (cancellation of EET). And then maybe politicians, top managers, doctors and judges. Simply people, outside the ordinary income of the Czech population. Otherwise, those surveys of housing affordability parties would not make sense. A group of high income people raise the prices of the rest. For those who need somewhere to live. They perceive real estate as a means of investment and are willing to spend large sums.
Is it a good time for a mortgage?
If you belong to the rest who are not so lucky, or did not manage to arrange it so well, you may be wondering when is the right time to buy your own property? At the moment, the real estate market is a bit stuck, buyers can afford to drive real estate prices down. So there is a lot to choose from. Gone are the days when there were queues of people interested in an apartment. However, many ordinary people lack finances. And so they wait for the right moment to take out a mortgage. Interest rates are slowly falling and will probably continue to fall. However, when mortgages become more affordable, there is a risk that the real estate market will pick up again and prices will soar again. So isn’t it better to take out a mortgage now and fix it for as short a time as possible before prices rise again?
survey
Is it a good time for a mortgage?
no, it’s better to wait
A total of 1 reader voted.
I also noted the opinion that the mortgage is simply worth it. It is better to take a mortgage for a few percent and invest your own money. But where to invest? You can never be 100% certain with any investment.
I’m not an expert, I can’t divine from a crystal ball like some economists. In my opinion, if you are dealing with a property for your own living, it is perhaps better not to wait until there is still more to choose from.
