Can I afford to buy?

I don’t think that anybody, including me was prepared for the fact that even during the pandemic the prices of apartments and houses would  increase so much. According to statistics that increase is around 10% in Prague.

As a multiple property owner I couldn’t be happier but what about the younger generation looking to get on the property ladder. Will the Czech Republic start to mirror the UK market where most first time buyers are in their late 30’s before they manage to secure their first mortgage? Will they even bother and become a generation of renters?

What about the foreigners living a longer than expected time in Prague ? Is it worth them buying and, more importantly, can they secure the financing to do so?

Whilst a lot of banks talk about their attractive interest rates ( not as good as last year but still good) the reality is that as a foreigner you are heavily penalised. With not so favourable interest rates but also a higher loan to value rate (LTV).  A 15-20% down payment with your own money seems to be the norm leaving the bank to just finance the remaining amount. When the average property price for a 2+kk was around the 2.5 million kc mark this amounted to a down payment of 500,000 Kc. In 2021 if you manage to secure a 2+kk for 4 million kc you can thank your lucky stars! This  extra 300,000 Kc to your down payment means putting the whole home owners dream on the back burner for many.

Fun fact but you will now need 11.4 times the average annual salary to afford an apartment in Prague!

Check out this interesting article by Deloitte on the matter :

It, for sure is a vicious circle because at the current rate of growth this gap is only going to get bigger and bigger.

Can I afford NOT to buy now must surely be the question?

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