Czechs continue to aspire to home ownership
Home ownership has become something of a social norm in the Czech Republic – a measure of what it means to be doing well in life. We want a roof over our heads, and we want it to be our own. The whole package. Some statistics even state that three quarters of Czech residents live in their own homes. The rest rent. However, this trend has struggled in recent years, mainly due to tighter conditions for obtaining a mortgage. The coronavirus pandemic, however, dealt Czechs a different, slightly better hand.
It devastated many sectors of the Czech economy, and foreign tourism virtually disappeared from major cities indefinitely. Yet the property market remained in exceptionally good shape. “It certainly cannot be said that the property market did not suffer at all. Take the short-term rental segment, for example – it is currently almost dead. Commercial properties are not doing much better, and I cannot overlook investments themselves either. During the spring of last year, they practically came to a standstill, whether because of the ongoing first wave of the pandemic or the announced abolition of property acquisition tax,” says David Novotný, owner and managing director of the independent real estate company Bohemian Estates International.
The fact remains, however, that the second half of the year was favourable for the property market. Firstly, the aforementioned property acquisition tax was abolished, and buying and selling resumed. Secondly, mortgage rates began to fall significantly during the summer, reaching levels not seen here for several years. “These two factors certainly helped increase interest in buying property, but we must not forget the value of property itself. When else were we meant to realise that investing in property is one of the safest ways to grow money than at a time when very few people could be certain about the future?” Novotný asks.
The answer is not particularly difficult. If economic developments unfold as experts now expect, many ways of growing money will not be especially favourable for some time. Property, by contrast, remains a tangible and valuable source of returns. But does it make sense to invest in it now, in the first months of 2021, or is it better to wait for a while?
“According to our estimates, a more stable six months now lie ahead. This applies to property prices, which we believe will not rise during the first two quarters, as well as mortgage rates. They will continue at the same levels and are very unlikely to fall or rise. However, conditions for obtaining a mortgage can be expected to tighten further, and banks will no longer assess only your previous payment record; they will also take an interest in factors such as your age and occupation,” adds David Novotný.
According to him, there is therefore no reason to wait in the coming months, and anyone still considering buying property should not hesitate. “Coronavirus brought much that was negative and little that was positive. But we should make use of that little. We do not know what this whole year will look like or what will happen. What we do know is that property and its value will not simply collapse,” Novotný concludes on behalf of Bohemian Estates International.