Inflation in the real estate market: what to expect?
Inflation in the real estate market: what to expect?
This year inflation in the euro area has hit its highest annual level since the creation of the euro currency in 1999. In May 2022, inflation jumped to 8.8 per cent in the EU and in the Czech Republic reached 11.2 per cent. Currently, inflation affects everything from food and services to everyday goods.
In January, it was expected that Real estate would be the most affected sector, with prices for mortgages and rents have already risen at an alarming rate. In fact, during the first quarter of 2022, the average cost of apartments in the Czech Republic surged by 26.3% according to the Czech National Bank.
Fearing that the situation might get even worse, young people may be induced to rush into getting debt and buying a house. But according to a survey of ČT24, only fourteen per cent of them can now afford a pledge.
Rental prices are also assumed to increase this year. Landlords will be impacted by higher overall costs of building maintenance, including necessary administrative expenses such as sewage collection, energy and water. Economists predict that most rents will increase in line with last year’s overall inflation rate of 3.8 per cent. This would mean a rate increase of hundreds or even thousands of crowns. Despite this, the Czech Republic’s housing market is expected to continue growing this year, even if at a slower pace.
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