CENTRAL GROUP: Conditions for buying a home will get worse

According to the ČSÚ figures published today, 1,190 new flats in new apartment buildings were permitted in Prague in September and a total of 5,270 flats have been given the green light since the beginning of the year. This is a year-on-year increase of 76%. On the face of it, great news. All the more so because after three quarters even more apartments have been permitted than in the whole of last year. On closer inspection, however, there are fewer reasons to be happy. The comparative base of last year is very low, with just over 4,200 flats in apartment buildings being permitted in the capital over the whole year (about 1,000 more if we include flats built in family houses, reconstructions and other types of buildings). However, Prague needs to permit and build at least 10,000 new flats every year, and we are nowhere near that even this year. Although we have a new building law, which we hoped would improve the permitting process, we do not have digitisation, which is one of its important tools. And we will not have it for at least another three years, so we have to reckon with the fact that we will still be struggling with a shortage of housing for a few more years.

At the moment, more apartments are coming onto the market, but these are mostly projects that were approved in the previous two years and their launch was postponed due to the difficult economic situation. It can be assumed that with the current extremely high demand, which is approaching the record levels of 2021, the battery of these pre-approved projects will soon run out and apartment prices will start to rise even faster than now. It is also not good news for those interested in new housing that mortgage interest rates are not falling nearly as fast as they could, as even the CNB's multi-governor Eva Zamrazilová points out. Moreover, the CNB itself has adjusted its forecast for interest rates, which should fall more slowly than previously expected. The banks' motivation to lower mortgage rates more quickly may be decreasing along with it.

Faster growth in house prices and slower mortgage rate cuts will result in some people being cut off from the opportunity to buy their dream new home. So if anyone is considering buying a new home, they should not hesitate too much. There will be no better conditions than now.

Source: CENTRAL GROUP