UniCredit Bank: preference for buying residential real estate increased in January

by   CIJ News iDesk III
2023-01-23   07:10

The profitability of investing in residential real estate increased in January, according to data provided by UniCredit Bank. Its indicator, which represents the net annual rental yield minus the average of mortgage and government bond interest rates in January, rose 18 percentage points month-on-month to minus 3.33 percent.

"This has made residential real estate investment slightly less unprofitable. As in the previous two months, the reason was the decline in government bond yields," said UniCredit Bank analyst Jiri Pour.

The gross annual rental yield in regional cities rose four points month-on-month to 4.06 percent in January due to a month-on-month decline in apartment prices (0.8 percent) and rental growth (0.3 percent).

Of the individual regional cities, investments continued to be the least favourable in Ostrava and Ústí nad Labem. At the other end of the ranking, Brno retained the top spot, followed by Olomouc and newly Hradec Kralove, which pushed Prague down to fourth place.

Month-on-month, the indicator fell only in Pardubice (by 17 points to minus 2.98 per cent) due to a rise in apartment prices and a significant drop in rents, while the highest growth in the indicator was in Zlín (by 52 points to minus 3.24 per cent), which, on the contrary, saw a strong decline in apartment prices and a rise in rents.

"This year we continue to expect a decline in average property prices of around five per cent, and in the outlook for the next few years we maintain the stagnation or slow growth of property prices below the inflation rate, which will lead to a gradual deflation of the property bubble," Pour estimated. In the coming years, he said, property prices could stagnate or grow more slowly than inflation.

Source: UniCredit Bank and CTK