A rough calculation for those interested in housing. 15 meters less and eight thousand more – Nauzal

Last year, high inflation and expensive energy complicated the housing situation of more than half of Czechs. And the uncertainty between them continues. Roughly a third of respondents are afraid of expensive energy, and the fear of the effects of inflation has also worsened, with roughly a quarter of respondents fearing it.

Despite this, Czechs are once again beginning to hope that better tomorrows will come in terms of the housing situation.

The current favorable development is reflected in the hopes of Czechs to purchase their own housing. The share of Czechs who think that they will not be able to afford their own housing due to inflation, energy prices and interest rates has fallen from 88 to 80 percent compared to last year.

“Among the Czechs, one can sense a slight optimism in the vision of acquiring one’s own home. On the other hand, they are still troubled by high inflation. Despite its decline, it remains relatively high and continues to represent the main scarecrow in the wallets of Czechs after two years,” comments Marek Bečička, director of Product & Real Assets Generali Investments CEE, on the results of the survey.

Nevertheless, the balance sheet remains rather frightening. In practice, in the current situation, only two out of 10 Czechs interviewed could buy their own apartment or house. Just two years ago, according to Generali data, it would have been roughly double.

Great optimism is not in place even among Czechs who are already taking out a mortgage. The percentage of those who currently have a problem with their repayments has risen. This is due, among other things, to the expiring five-year fixation of mortgages, which affect tens of thousands of Czechs every year.

“Just five years ago, it was possible to buy a smaller apartment in Prague with an area of ​​48 square meters for five million crowns. When using a mortgage with a repayment period of 30 years and an LTV of 80 percent of the property’s price, the repayment amounted to just over 15 thousand crowns per month. This year, for the same money, they would buy an apartment of 33 square meters, so they would lose 15 meters and pay roughly 10,000 more,” comments Bečička.

While in 2018, the installment of CZK 15,000 represented approximately 47 percent of the then average net salary in Prague, the installment of CZK 24,000 to 25,000 after the end of the fixation currently corresponds to a full 58 percent.

In this context, we cannot ignore the fact that the larger the share of mortgage repayments in the income, the riskier the loan becomes. This is also why last year in April the Czech National Bank introduced the so-called DSTI limit (the ratio between the mortgage applicant’s monthly net income and the amount that falls on the repayment of all his loans) to 50 percent.

But she canceled it again this June. According to experts from the mortgage market, many banks still adhere to it when approving mortgage loans, precisely in an effort to maintain safe repayment of loans.

Compared to last year, the decreasing concern that people will not be able to afford their own housing may be related to respondents’ outlook on real estate prices.

More than two-thirds of Czechs think that property prices will no longer increase at the current rate. A total of 39 percent of respondents believe that real estate prices will slow down, another 22 percent of respondents even believe that real estate prices will fall.

“Despite the demonstrable optimism in society, which our survey confirms, I think that after a slight correction real estate prices have stabilized and in the future they can be expected to grow again. Not so dramatic anymore, but I believe it will continue,” concludes Bečička.