Investments in residential real estate were almost as unfavourable in September as in August. This is based on data by UniCredit Bank. Its indicator, which represents the net annual rental yield minus the average of interest rates on mortgages and government bonds, fell to minus 3.06 percent. According to the indicator, investing in residential real estate is no longer paying off.
As in the previous month, the indicator was pulled up by continued month-on-month rental appreciation (2.3 per cent) and a slight decline in mortgage rates (nine points). In the opposite direction, the rise in house prices (up 0.9 per cent) and the rise in government bond yields (up 23 points) were reflected. Similar to the previous month, gross annual rental yields in the average county town rose five points to 4.24 per cent.
Of the individual regional cities, properties continued to be the least attractive in Ústí nad Labem and Ostrava, while at the other end of the ranking Zlín and Jihlava took the lead, followed by České Budějovice. Prague no longer stands out among other regional cities in this respect and is exactly in the middle of the ranking.
Month-on-month, the indicator fell in eight regional cities, most notably in Zlín (by 41 points) due to above-average growth in apartment prices and falling rents, and in Pardubice (by 27 points) due to rising apartment prices. Month-on-month, the indicator rose mainly in Liberec due to a fall in apartment prices and in Olomouc due to rising rents.
“The recovering real estate market dispels fears (or hopes) of a sharp fall in prices, which is unlikely to happen without a trigger in the form of a deeper economic recession,” said UniCredit Bank analyst Jiří Pour. For this year, he maintains his long-presented forecast of a five per cent drop in property prices. The development in the following years is difficult to predict, he said.
Source: UniCredit Bank CZ
