Investments in residential real estate were slightly less unfavourable in August than in July. This follows from data provided by UniCredit Bank. Its indicator, which represents the net annual rental yield minus the average of interest rates on mortgages and government bonds, rose to minus 3.05 percent. According to the indicator, investing in residential real estate continues to be unprofitable.
The indicator was pulled upwards by the month-on-month rise in rents and a slight fall in mortgage rates, while the opposite direction was reflected in the rise in house prices and the rise in government bond yields. The gross annual rental yield on the county average rose six points to 4.19 per cent, the same as the previous month.
Of the individual regional cities, the least unfavourable properties continued to be in Ústí nad Labem and Ostrava. At the other end of the ranking, Brno returned to the lead, followed by České Budějovice and Prague. Month-on-month, the indicator rose in eight regional cities, most notably in Zlín (up 27 points), Ostrava and Ústí nad Labem (up 18 points) due to falling house prices and rising rents. The month-on-month decline in the indicator occurred mainly in Jihlava and České Budějovice due to rising apartment prices and in Liberec due to cheaper rents.
“All in all, we continue to believe that property prices will remain basically stagnant for the rest of this year and that the annual price decline will stabilise at around five per cent,” said UniCredit Bank analyst Jiří Pour. In the following years, he said, house prices could stagnate or slowly rise, which would mean a slow deflation of the price bubble by way of a decline in real house prices.
Source: UniCredit Bank and CTK
