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There is no escape from the jewel. Living on your own or renting costs more and more

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Czechs’ interest in buying their own housing did not slow down in the first quarter of this year, despite rising prices and rising mortgage prices.

The offer prices of “second-hand” flats increased by tens of percent year-on-year, both for small flats up to 60 square meters (2 + 1 and 2 + kk) and larger ones up to 80 square meters (3 + 1 and 3 + kk) . This follows from the analysis of the offer prices of more than 5.5 thousand apartments in personal ownership in very good condition offered through the Sreality advertising portal.

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Flats grew at a double-digit rate in all regional cities without exception, but most in Ústí nad Labem, which had long kept low prices per square meter, so prices rose by three-fifths year-on-year due to high demand for the cheapest possible housing. While in the first quarter of 2021, one square meter of a smaller Ústí nad Labem apartment cost less than 30 thousand crowns, this year the buyers had to be willing to pay almost 47 thousand crowns for it.

The average 40-meter apartment with a layout of 2 + kk could be bought in Ústí a year ago for about 1.2 million crowns, this year those interested have to prepare almost 1.9 million crowns for it, and at the moment the 2.8-meter apartment has to save 2.8 million crowns.

“Ústí has ​​long been a suitable location for rent in terms of buying apartments, and despite the largest increase in sales prices, it still maintains its position,” says Hana Kontriš, manager of the Sreality.cz advertising services team.

Although the bid prices may not correspond to the realized ones, the difference between them has decreased in recent years. While a few years ago it even reached a fifth of the advertised price, at the end of last year, according to the chief economist of the Videobydlení portal, Jakub Veverka, it was only in the order of percent. “In the first quarter of 2022, this difference is slowly increasing again, averaging 10 percent. With the tightening of mortgage conditions, this difference will continue to grow, “he adds.

After Ústí nad Labem, the prices of smaller flats rose the fastest in České Budějovice, by almost half, and then in Karlovy Vary, Hradec Králové, Jihlava and Ostrava. Their prices also rose by a third in Pardubice and Olomouc.

On the other hand, prices rose the slowest in Prague, where they “rose” by a fifth year-on-year to 131.5 thousand crowns per square meter. The capital thus remains, despite the “slowest” rise in prices, still the most expensive place to live. An average 40-meter second-hand apartment could be bought for 4.5 million crowns a year ago, today buyers have to prepare 5.3 million crowns and almost eight million crowns for a 60-meter 2 + 1.

The second most expensive city to live in is Brno, where the prices of smaller flats have risen by about a quarter to more than 110,000 crowns per square meter. The third most expensive city for housing is Hradec Králové and the fourth České Budějovice. After Ústí nad Labem, on the other hand, Ostrava and Karlovy Vary are the cheapest places to live in regional cities. For the time being, a 40-meter apartment can be found for less than three million, except for Ústí in Pilsen, Liberec, Jihlava, Zlín, Ostrava and Karlovy Vary.

Prices of larger apartments (80 m2) rose in the vast majority at a slower pace than small ones. Prices grew the fastest again in Ústí nad Labem, but while for smaller flats they grew at a rate of more than 60%, for larger flats it was “only” by 52 percent. People have to prepare 3.2 million crowns for an 80-meter Ústí nad Labem apartment.

“The prices of qualitatively comparable flats per square meter are usually higher for smaller flats in the same localities than for larger flats, as evidenced by the current analysis by Sreality.cz. The price difference is currently the smallest in Zlín and Ostrava, where investors do not have to look so much at the profitability of the investment according to the footage as in other regional cities, “comments Šarlota Smutná, data analyst Seznam.cz.

The biggest difference in the prices of larger and smaller flats per square meter is recorded in České Budějovice, where a meter of a 2 + 1 flat is approximately 18.5 thousand crowns more expensive than a 3 + 1 flat. So while those interested in housing the size of 60 square meters will spend almost 5.2 million crowns, they will buy a significantly larger apartment (80 square meters) for as little as 5.4 million crowns. There is also a big difference (more than 10,000 CZK / square meter) between small and large flats in Prague, Brno and Hradec Králové. If you don’t have a deep pocket, it pays to buy more housing in these cities in terms of space.

On the other hand, Ostrava registers the smallest differences in the prices of smaller and larger flats per square meter. While smaller flats cost about 53 thousand crowns per square meter, larger ones cost “only” less than three thousand crowns less, ie 50 thousand crowns. The size of the apartment is almost directly proportional to its price. Ostravák will pay 2.1 million crowns for a 40-meter apartment and just over four million for an 80-meter apartment.

As for the further development of apartment prices, their prices cannot be expected to fall, with some exceptions. Although some people who have bought an apartment for investment and have a mortgage may be able to dispose of the property, there are still a large number of people who hold cash and are willing to buy an investment apartment, which will push prices up, albeit more moderately than in the past. .

“For real estate investment to really make sense, it must have a return of around five to six percent. This is practically impossible in the current situation. This is due to energy prices as well as high mortgage rates. Investors will want to sell investment flats before the agreed period of mortgage fixation ends, and the amount of rent will no longer cover their monthly mortgage payment, “estimates Viktor Mejzlík, co-founder of the GarantovanyNajem.cz service.

However, this is counteracted by the fact that a large number of buyers hold cash. “According to our data, the ratio of buyers who have cash versus those who finance purchases through a mortgage loan is 60 to 40 percent in favor of investors’ cash,” says Veverka of Videobydleni.cz. Real estate for sale will thus still be under pressure from demanding investors, who will try to hide their free funds in a stable asset that will keep their value despite inflation.

Rents grew more slowly, but a boom awaits them

According to the Sreality portal, rental prices also rose in the first quarter, but at a slower pace than apartment prices. They grew at a double-digit rate “only” in six regional cities out of 14. They rose the fastest, by 15 percent, in České Budějovice and then in Prague and Brno. On the other hand, they grew the slowest in Pilsen, where they increased by only four percent. The advertising portal was based on data from almost 7,900 flats offered for rent in layouts 2 + kk and 2 + 1, which are the most sought-after among those interested in renting.

A 60-meter apartment can be rented in the capital for 19 thousand crowns and in Brno for 16.4 thousand crowns, in the cheapest Ostrava and Ústí nad Labem, less than 11 thousand crowns per month will be enough for those interested.

In the coming months, however, tenants will have to reckon with high prices. “Even before the start of the war in Ukraine, it was clear that the Czechs were waiting to move to rental housing. The war will further accelerate this process by causing stronger inflation, tighter monetary policy and a slowdown in construction, “said Vít Hradil, chief economist at Cyrrus.

Whereas before the start of the war the securities trading company expected rents to rise by a total of a fifth in 2022 and 2023, now, taking into account the effects of the war, it is leaning towards a faster dynamics of around 30 percent.

The Sreality.cz manager sees it in a similar way. “We are currently seeing a growing interest in rental housing and we expect this trend to intensify. The reason is the arrival of Ukrainian refugees who are looking for affordable rental housing in larger cities. Even with the rising price of real estate in the last year and rising mortgage rates, it can be assumed that many people are starting to tend to use apartments for rent, because buying their own housing has become financially unaffordable for them, ”says Hana Kontriš.

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