Sales of new flats in Prague have been growing for two consecutive quarters. Already in the first quarter of this year, the number of new flats sold increased by almost 20% compared to the last quarter of 2022. In the second quarter, the interest in new housing became even stronger. In addition, the DSTI indicator, which has most worried mortgage applicants, will cease to apply from the beginning of the holiday season. This will make loan financing more accessible to a wider group of applicants, who will also be able to access more expensive apartments.
For example, for a Prague family with 2 children (we consider both parents older than 36 years) and average income, this means that while until now they could take out a mortgage for a maximum of CZK 6.5 million. CZK, from 1 July they will be able to borrow up to CZK 8.8 million. CZK. Instead of a 2-bedroom apartment, they will be able to get a three-bedroom apartment in a better location (provided they meet the minimum amount of their own resources).
Although it is likely that banks will not release the floodgates completely and will continue to require the DSTI indicator in some milder form, this step will still contribute to a further revival of interest in new flats.
According to our survey, around half a million people in Prague are considering buying a new apartment in the next 5 years, but they are currently postponing their purchase decision and waiting for better conditions. With the current rise in rents, it is precisely at mortgage rates of around 3% p.a. that the amount of monthly mortgage payments will converge with the amount of rent, which will lead to the return of deferred demand to the market.
Source: Central Group
