The economist Lukáš Kovanda has warned that by loosening the restrictions banks have to follow when providing mortgage loans, the Czech National Bank’s is signalling that prices for residential property could fall by more than 20 percent. Until last week, banks weren’t allowed to lend money to consumers who couldn’t put down at least 20 percent of the value of the property and whose monthly payments made up more than 49 percent of their salary. Kovanda says the CNB can’t say what it “really” thinks clearly, because its voice has an oversized impact on the economy. “It’s up to independent economists to say what the CNB can only carefully hint at,” writes Kovanda in a piece in the daily Lidové noviny. “So, let’s say it: By untying the hands of the mortgage market and banks preventively – rather than during an emergency – the bank is de facto supporting real estate prices. It’s trying to provide additional demand for the property and mortgage markets ahead of time in order to firm them up precisely so they don’t collapse.” Kovanda predicts that while real estate prices are likely to fall next year, they’ll begin rising again in 2022. Combined with extremely low interest rates for mortgage loans, he predicts that 2021 will provide a once-in-a-generation opportunity for Czechs to buy real estate.
