High inflation entails something that has not been observed in the Czech Republic for a long time – a stop in the growth of prices for residential real estate

Prices for secondary housing have even begun to decline. According to the latest Eurostat data, 78.3% of the population own their own home. Demand has been high for a long time. According to the Czech Statistical Office, property prices rose by about 130% between 2015 and 2022. However, the rise in consumer prices, which accelerated in the second half of 2021, led to them leaving the acceptable range of the Czech National Bank (CNB) and reaching an average of 5.1%. One of the hardest hit sectors has been construction, which has been experiencing material shortages since the pandemic.

Double-digit inflation is expected to continue in the coming months. In response, the CNB sharply increased its two-week base rate. This made loans, including mortgages, more expensive. The current mortgage rate is around 6%.

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