2024 is the right year to take out a mortgage in the Czech Republic
The prospect of renewed growth in house prices makes 2024 a good moment to consider purchasing a home. As reiterated on several occasions, Prague is a challenging place to buy a house due to the significant imbalance between salaries and house prices. This imbalance extends to other cities in the Czech Republic, making it the second most expensive country in Europe for purchasing property at conditions suitable to income, with Prague even ranking as the third least affordable city on the continent.
However, real estate experts argue that 2024 may be the right year to take out a mortgage and secure affordable property. With inflation cooling down, leading to an expectation of a continued decrease in interest rates, house prices may begin to rise again in the years to come. Mortgage rates are indeed slowly declining, currently standing at around 5.19%, as reported by the Czech Banking Association. In contrast, after a period of stagnation in real estate prices following multiple economic shocks, real estate prices are already beginning to rise again.
According to experts, this combination of factors could make this period a good moment to buy. In fact, the likelihood of house prices returning to their previous strong growth is leading experts to urge people to act quickly to secure a good deal. It’s expected that mortgage interest rates will decrease throughout 2024, in line with projected decreases in the Czech National Bank’s base interest rates. It is estimated that by the end of the year, mortgage rates will reach 4%. However, this will be counterbalanced by the simultaneous increase in house prices. Therefore, it becomes convenient to buy now when there is a reduction in mortgage rates, but not significant enough to result in an increase in house prices. Furthermore, it’s important to note that while mortgages may be refinanced in the future based on changed circumstances, the opportunity to buy property at a discounted price may not return soon. Therefore, 2024 could be the year to act for those interested in taking out a mortgage.
To take out a mortgage, individuals over 36 must deposit 20% of the property value, while those under 36 deposit 10%. Expatriate buyers do not need a permanent residence permit to institute it. Any form of residence permit or proof of work in the Czech Republic is sufficient. Even self-employed individuals can take out a mortgage, provided they have a tax domicile in the Czech Republic.
Another factor positively affecting early mortgage origination is the imminent legislative change, effective in September, introducing a commission for early mortgage repayment during refinancing when clients move from one bank to another. Those seeking a refinanced mortgage with better terms will have only a limited time to do so before this new commission takes effect.
In conclusion, for both those interested in buying a house and those interested in obtaining a better interest rate, economic trends, legislative changes, and industry experts suggest that 2024 represents an advantageous opportunity and therefore, the right time to act.
Sources: https://www.expats.cz/
