How coronavirus has changed interest in investments. Property remains a safe bet

These uncertain times raise the important question of where to place your money so that you do not lose it and it does not lose a large part of its value in the future. Property appears to be the safest asset. Despite the second wave of the pandemic, the domestic property market appears unaffected; on the contrary, interest in buying property is growing.

“This year, experts predict the highest investment in property and a record volume of mortgages for the past few years. In response to the coronavirus pandemic and the related government measures, the Czech National Bank repeatedly reduced interest rates. The main banks on the market subsequently began offering lower rates too – rates have now fallen below two per cent, and mortgages have become cheaper in a way that no one expected at the beginning of 2019,” explains David Novotný, owner and managing director of the real estate company Bohemian Estates, which deals with the purchase, management and sale of property in the Czech Republic and abroad. This is naturally reflected in enormous interest from mortgage applicants – in August, banks processed almost seven thousand mortgage loan applications and provided mortgages with a total value of CZK 19 billion. “It is clear that Czechs are investing their funds in property for security. Unlike savings sitting idle, their money earns a return,” adds Novotný.

As is well known, Czechs are a pragmatic nation, which is why in times of crisis they like to put their money into tangible investments. If some households are uncertain about the future and currently have sufficient savings, they consider where to put them so they do not lose them. Property is a safe and tangible way to make use of money without concern.

Interest in owner-occupied housing remains strong

The enormous interest in buying property is also supported by cheaper mortgages and the boost to the property market brought about by the abolition of property acquisition tax. And which properties are attractive investments? “Flats or houses in the wider centre of Prague and other Czech cities remain desirable locations. The most sought-after type of property in these areas is a smaller flat with a 1+kk or 2+kk layout. These flats are the easiest to let. With effective management, the owner can simply earn income from rents, which increase by a few per cent each year. Holiday cottages and country houses in attractive rural locations are also booming. This reflects the current situation, where leisure activities and recreational opportunities are considerably limited. In this respect too, Czechs are keeping their feet on the ground and, through their increased interest in these properties, are preparing for the future,” explains David Novotný of Bohemian Estates.