Mortgage repayments are already rising more slowly than rents
The growth rate of mortgage repayments slowed down significantly in the third quarter of this year. While the mortgage payment (with LTV 80) for a new Prague apartment of 60 sqm grew by 17% in the second quarter, it increased by only 1% in the third quarter, while the rent for a similar apartment grew by around 7% in the previous quarter, according to the RealityMIX server. Mortgage payments are therefore already growing at a slower pace than rents, with the prospect that interest rates will first stagnate and then slowly start to fall.
By contrast, rents will continue to rise steeply - in Prague alone, rents have risen by almost a fifth since the beginning of the year. The gap between rents and mortgage payments will therefore continue to narrow. This may provide an impetus to the buying decision for those considering owning their own home. This is, after all, the rational and long-term preferred choice of most Czechs. This is because they know that with renting they are appreciating someone else's investment, while they will eventually pay off the debt to the bank and will be left with a property whose value increases over time. Moreover, the flat also serves as a protection against inflation and a means of providing for their old age.
Source: Central Group