Freshly published summer figures show that the average price of a new Prague flat stands at 10,960,000 Kč, in other words 11 million less forty thousand. It is a figure that in no way reflects the size and layout of the property, its location or the local amenities – an average is simply an average. That is also precisely why it is a number we can compare over time with historical data.
Do you want to be a millionaire?
Last year the average flat price in the same period hovered around 9,800,000 Kč. The psychological threshold of ten million has therefore been broken quickly and quite decisively. Rising property prices are linked partly to the arrival of institutional investors on the market (including the planned entry of pension funds), and partly to marginally cheaper mortgages, which are pushing property prices up.
Our grandmothers’ saying that saving pays off three times over is ceasing to hold true in today’s breakneck era
Breaking the ten-million threshold means one more interesting thing. A mortgage on an average flat in Prague is now only within reach of a “millionaire” – or rather of someone who already has at least one million Czech crowns sitting in their account. The rule is that clients must have saved at least 10% of the total value of the requested loan from their own funds. In the case of that hypothetical average flat, that comes to almost 1.1 million Kč.
Busy times at the mortgage banks
Hundreds of thousands of Czech households face an interest rate refix this year, and for some it may prove a tricky period in life. Those who in 2020 opted for the popular five-year fixation in particular will feel the increase in their monthly repayment very sharply in their wallets. With large loans it can even run to several tens of thousands of crowns a month. On average, however, the change in the repayment will be around 3,500 Kč, upwards, of course.
A great many families are in for an unpleasant shock this year when they sit down with their mortgage advisor
If you would like a detailed overview of how the so-called interest rate shock has developed historically – that is, the difference between the existing and the new rate on refinancing – we can recommend this article (external), based on data from the Czech Banking Association, Hypoindex and Golem Finance. Are you a property investor who does not have the time or the inclination to follow market swings? We have a solution for you. Place your flat or flats in the hands of a professional property manager and we will make sure you always rent out at the highest possible price in the given location. You can find out more about our FLAT SERVICE Partner & Garant services at sales@flatservice.cz or on +420 277 000 330.
