Why buy property in the Czech Republic?
Not only have we had record temperatures this July in the Czech Republic, but the property market is Prague continues to get hotter and hotter.
For approx 1 year now the market has been picking up and demand is now outstripping supply. Developers have started to hold back stock as they know they can sell them later at a higher price. Trying to get good discounts when buying in Prague is very difficult.
Demand is being driven by both locals and foreigners. Let’s take a quick look at why:
- Mortgages are very low. Locals can get rates below 2% and foreigners less than 3%. With rental yields around 4-5% and savings rates under 1%, investing in a property is a no-brainer. LTV’s for foreigners are up to 85%.
- The economy is growing, Czech GDP growth is expected to be around 3% in 2015, one of the best in Europe.
- The Czech Republic is still managing to attract a significant amount of FDI, which helps to drive better economic conditions
- Wages are rising, and unemployment remains low
- Taxes are low, and most of our clients pay no income tax on their rental income.
- After several years of falling or flat prices there is pent up demand, during these years a lot less property was built too, giving a classic recipe for a demand/supply swing which leads to rising prices.
- The “Czech property investor” is now a significant factor in the local property market, unlike in the last boom from 2005-20008 where is was mainly locals buying a home to live in
- The Czech national bank (CNB) introduced a weak Crown policy in 2013. This has seen the CZK fall from 27 to the GBP to 38, massively increasing the purchasing power for UK investors. Furthermore, at some stage it is highly likely the CNB will have to stop its currency interventions (originally planned to be phased out in 2016) and thus the Crown is likely to strengthen again giving foreign investors a double whammy effect on their returns.
We believe property prices in Prague will continue to rise over the coming year at least.
If you’re looking to buy in Prague, please get in touch as many of the investments we source never make it to our website. It’s really a buy now before you miss it opportunity at the moment.
If you already own a property in the Czech Republic please get in touch as we have many investors looking to buy already tenanted properties. We offer a free no obligation valuation of your property portfolio.